Goa govt given 7 days to pick option for GST compensation

PANAJI: The Goods and Services Tax (GST) council met on Thursday for a crucial deliberation on the compensation owed to states for the shortfall in collections, where Goa asked for its due of Rs 1,018 crore to be paid from the Rs 11,000 crore that the Centre has its in kitty of GST cess.
Panchayats minister Mauvin Godinho participated in the meeting where the Centre offered states two options to fill in the gap in state’s revenue due to the GST shortfall and delayed compensation.
The GST council has given all states seven days to decide between borrowing less and getting the compensation later and borrowing more now and repaying the loans using cess collected after 2022, when compensation stops.
“Our plea was simple. Bigger states like Maharashtra have pending dues of Rs 22,000 crore and more, but Goa’s dues are just 5% of this,” said Godinho. “The Centre has Rs 11,000 crore as compensation cess in its kitty and it can afford to compensate smaller states like Goa.”
Godinho said that Goa is averse to higher market borrowings at high interest rates as it would put the state in a “debt trap”. The Centre has offered to help states borrow through the Reserve Bank of India to meet the deficit arising due to GST.
“We will brief the chief minister and we will chose the option. Most of the states will opt for option 2 where centre will do the borrowing on behalf of the state and it will be repaid along with interest from the cess collected,” said Godinho.
He said that the Centre has agreed to extend the GST transition period beyond five years for another three years.
“The meeting will be held on September 8 to decide how to raise the amount to collect the shortfall in the compensation cess what was the rightful due of the states. It may necessitate a change in law,” said Godinho.
While non-NDA ruled states are against the Centre’s move to ask states to borrow and meet the deficit, states like Goa were more muted in their criticism.
“The revenue shortfall in GST collections has to be compensated by the Centre, this is the law. It is a constitutional provision. All states have made this demand that the Centre should release the compensation to those states that have not been paid,” said Godinho.
The GST Council will meet on September 8 to note the decisions taken by various states. Subsequently, on September 19, the GST Council will meet once again to review other matters.