The Goods and Services Tax (GST) revenue shortfall faced by states is likely to decrease by about Rs 40,000 crore in the current fiscal on improved collections over the past four months, an official said.
The official said that GST collections could bring down the total shortfall amount to around Rs 1.40 lakh crore. The official further said that Rs 1.10 lakh crore would be borrowed through the special window as planned and a higher mop-up would be utilised to compensate for the loss of revenue due to COVID-19.
The revenue loss next fiscal would be much less compared to this fiscal. However, meeting the 14 percent revenue growth would be difficult, the official added.
The sharp decline in GST collections was estimated to lead to Rs1.80-La-Cr shortfall in GST revenues of states. This includes Rs 1.10 lakh crore revenue loss on account of GST implementation and Rs 70,000 crore on account of the COVID-19 pandemic. The centre had set up a special window to borrow funds and pass on to the states for meeting the Rs 1.10 lakh crore GST revenue loss.
The centre has already borrowed and released to the states Rs 1 lakh crore under the special window. The official further said that for the next fiscal beginning April 1, the GST council will decide on the mechanism for compensating states in its upcoming meeting in March.
Under GST law, states were guaranteed to be compensated bi-monthly for any loss of revenue in the first five years of the GST implementation from July 1, 2017. The shortfall is calculated assuming a 14 percent annual growth in GST collections by states over the base year of 2015-16.
Centre releases Rs 1-La-Cr GST compensation to states since Oct 2020
Taxpayer’s registration to suspend for anomalies in GST sales return?
Ayurveda economy has witnessed to 90 pc growth post-COVID: Harsh Vardhan