GST has been discussed a lot in Tamil Nadu. The state has reportedly admitted to the first borrowing option for GST dues put forward by the Union government at the GST Council meeting that was held on Monday. This came after the state previously raised problems with the offer of states borrowing to meet the GST revenue deficit. The state’s Fisheries Minister D Jayakumar, who attended the meeting through video conferencing reportedly said that Tamil Nadu is picking option 1 given the limited options available, but said that the assumption of 10% growth in the option 1 is highly unrealistic.
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He reportedly also said that the state hopes it will be revised to ‘reflect a higher proportion of the actual loss in revenue of states’. Option 2 has been formed out to be quite unattractive and unacceptable to almost all states, he noted. At the GST Council meeting on Monday, no consensus was reached between the Finance Ministry and the states over the two borrowing options presented by the Centre. However, FM Sitharaman approved the extension of the GST compensation cess levy by two years till 2024. The GST Council will meet again on October 12.
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At the previous GST Council meeting, the Centre granted states with two options to borrow the GST compensation shortfall. The first option was that the Centre would provide a special window to states to borrow Rs 97,000 crore at a reasonable rate of interest in consultation with the RBI. This amount is the shortfall arising out of implementation of GST. This figure of Rs 97,000 crore has been arrived at assuming that compared to last year’s GST collection, 10% more would be the GST collection in a normal situation.
