Covid "Act Of God", We May See Economy Contract: Nirmala Sitharaman

[Kool_SRG]

GST Council meeting: The centre is hard pressed on paying GST dues to states that have not earned much this year due to months of lock down necessitated by the COVID-19 crisis

New Delhi:

The coronavirus pandemic has hurt goods and services (GST) collection and the shortfall is ₹ 2.35 lakh crore for fiscal 2021, the government said on Thursday. Finance Minister Nirmala Sitharaman, after a meeting of the decision-making body for fixing GST policies, said the coronavirus pandemic was "an act of God" and an unforeseen factor that affected GST collections. "...This year we are facing an extraordinary situation. We are facing an act of God where we may even see a contraction," she said.

The centre has released over ₹ 1.65 lakh crore as GST compensation to states for fiscal 2020, including ₹ 13,806 crore for March, while cess collected for GST compensation was only ₹ 95,444 crore, Ms Sitharaman said.

The meeting of the GST Council on Thursday was held amid severe pressure from states that have been seeking compensation for revenue shortfall amid the coronavirus pandemic.

The centre is hard-pressed on paying GST dues to states that have not earned much this year due to months of lockdown necessitated by the COVID-19 crisis. Punjab, for example, has said it may see a revenue deficit of ₹ 25,000 crore this year.

Some of the options that the GST Council considered to pay off the states include borrowing from the Reserve Bank of India (RBI).

"Two options were placed before the states. We can facilitate through RBI. States have asked to put us both the options in a detailed form today and give them seven working days, after that they will come back. It means we can have a small meeting on GST. We will take a call. Two bi-monthly payments are delayed this year. We want only for this year. The GST Council can look into the payments again in April next year," Ms Sitharaman said.

Congress-ruled states and those run by parties other than the BJP have said the centre has a statutory obligation of paying GST dues to them. The centre has, however, claimed it has no such obligation if there is a shortfall in tax collections.

"Government of India owes us ₹ 4,400 crore for a small state like Punjab for which the total salary bill is ₹ 1,800 crore. It is getting difficult for us to run the state," Punjab Finance Minister Manpreet Singh Badal tweeted.

Under the law that governs goods and services tax or GST, states have been guaranteed payment for loss of revenue in the first five years since the GST came into force on July 1, 2017. This means states have been promised compensation for any revenue shortfall till 2022 - if they fell below 14 per cent annual growth since July 2017.

The government's top lawyer Attorney General KK Venugopal has also said the centre has to compensate states fully for the loss of revenue in GST during the coronavirus crisis, according to sources.

The Congress has called the centre "withholding" GST dues to states a "sovereign default" and going back on constitutional guarantees, which had been the reason the states had come on board with the GST plan in the first place.

GST collections including compensation cess to the states had been falling short of targets even before the coronavirus pandemic, making it difficult for the centre to compensate the states.

[Kool_SRG]

Swamy rubbishes Nirmala's 'Act of God' comment, wonders why GDP was low before COVID-19

BJP MP Subramanian Swamy on Friday rubbished Finance Minister Nirmala Sitharaman's comment of coronavirus pandemic being "Act of God" and wondered why GDP was low before COVID-19.

Taking to Twitter, Subramanian Swamy wrote: "I am reliably informed that FM N. Sitharaman told a meeting that COVID-19 is an act God!! I will post the video soon. Was the decline in annual growth rate in GDP from 8 % in FY 15 to (1st Qtr 2020) 3.1 % pre-C0VID, also an act of God?"

Finance Minister Nirmala Sitharaman on Thursday referred to COVID-19 pandemic as an "act of God" and said there could be contraction of the economy. Sitharaman, who spoke to reporters through video conference after 41st meeting of GST Council, said the two options for compensating states on the Goods and Services Tax (GST) to bridge revenue shortfall, will be available only for this year, reported news agency ANI.

"This year we are facing an extraordinary situation. We are facing an act of God where we may even see a contraction of the economy," she said.

The Centre on Thursday gave two options for compensating states on the Goods and Services Tax (GST) to bridge revenue shortfall as the economy faces a prospect of contraction in the current fiscal year due to the COVID-19 crisis.

The first option provides a special window to states in consultation with the Reserve Bank of India (RBI) to provide Rs 97,000 crore at a reasonable rate of interest. This money can then be repaid after five years from the collection of cess. The second option is that the entire GST compensation gap of Rs 2.35 lakh of this year can be met by states in consultation with the RBI.

[Kool_SRG]

 

[Kool_SRG]

After FM Sitharaman said two-wheelers merit a GST cut, bike makers fear buyers may postpone purchases

On August 25, Finance Minister Nirmala Sitharaman had said two-wheelers are neither a luxury nor a sin good and hence merit a rate revision. However, there has been no announcement by the GST Council of any such cut or proposed cut. One industry body leader has pointed out that Sitharaman had showed similar intentions in August 2019, resulting in customers delaying purchases, and passenger vehicle sales contracting

[Kool_SRG]

Just now, Kool_SRG said:

After FM Sitharaman said two-wheelers merit a GST cut, bike makers fear buyers may postpone purchases

On August 25, Finance Minister Nirmala Sitharaman had said two-wheelers are neither a luxury nor a sin good and hence merit a rate revision. However, there has been no announcement by the GST Council of any such cut or proposed cut. One industry body leader has pointed out that Sitharaman had showed similar intentions in August 2019, resulting in customers delaying purchases, and passenger vehicle sales contracting

Two Wheeler companies & many pointed about this to reduce GST on two wheeler from 28% slab from more than a year...

[Kool_SRG]

States given two options on compensation: Highlights of GST Council meeting

Here are the key points discussed by Finance Minister Nirmala Sitharaman in the 41st GST Council meeting

Amid a clamour by opposition-ruled states for the promised compensation due to loss of revenue arising from the implementation of GST, Finance Minister Nirmala Sitharaman presented two options under which they could borrow from the market to make up for the estimated deficit of Rs 2.35 lakh crore this fiscal.

Following a five-hour long meeting of the GST Council, Sitharaman said there was no proposal to raise tax rates to make up for the revenue shortfall that has been compounded due to the Covid-19 pandemic. “This year we are facing an extraordinary situation… we are facing an act of God which might even result in a contraction of the economy,” she said.

Here are the highlights of GST Council meeting:

#1) The GST shortfall in FY21 is expected to be around Rs 2.35 lakh crore. This shortfall is due to Covid-19 as well. Shortfall in compensation due to implementation of GST has been estimated to be Rs 97,000 crore.

 

#2) States given two options for GST compensation. The first option is providing a special window to states, in consultation with RBI, for borrowing Rs 97,000 crore at a reasonable interest rate. The second option before the states is to borrow the entire Rs 2.35 lakh crore shortfall under the special window.

#3) States given seven working days to decide which option they want. Sitharaman said “the interest from borrowing would be repaid from the cess collected in the years beyond the first five years of GST implementation”.

#4) “These options will be available only during current year. The situation will be reviewed next year in April and decision made on what is best for the country,” Sitharaman said.

#5) Sitharaman said both the options hinged upon the fact that borrowing would be done by the states.

“We very clearly said in both the options… that we shall facilitate talking to the Reserve Bank and getting it at a G-Sec proportionate number of years linked rate for all the states so that each state does not have to go running for the loan and face different situations and in the process the bond yields (turn) higher. So, we said we will facilitate it, but the borrowing can be done in the name of the states and all states roughly can get the same rate of interest,” Sitharaman said.

#6) The total GST compensation to be paid to states for April-July period is Rs 1.5 lakh crore. “This is so because there was hardly any GST Collection in April and May,” said Revenue secretary Ajay Bhushan Pandey.

#7) The Centre has released over Rs 1.65 lakh crore in 2019-20 as GST compensation. The amount of cess collected during 2019-20 was Rs 95,444 crore. The balance of about Rs 70,000 crore was paid from the excess cess collected in 2017-18 and 2018-19. The compensation payout amount was Rs 69,275 crore in 2018-19 and Rs 41,146 crore in 2017-18.

#8) Attorney General KK Venugopal has opined that the compensation gap cannot be met from the Consolidated Fund of India and suggested that the compensation cess levy could be extended beyond 5 years to meet the shortfall.

[Ryzen_renoir]

Gujju  economics at work ,  polavaram R&R ki inka paisalu Ravu .

Ilanti times konchem liberal ga money ivvali , inflation target kosam growth ni chaala compromise chesaru .

Corporate tax taggichadam kanna they should have reduced GST .  Exports have remained flat over the last 8 years due to sheer incompetence . 

If they really care about increasing exports they should enter more free trade agreements except with China . Industrialists daggara money theesukoni import tax penchutunaru , this decreases productivity . 

Arun Jaitley and nirmala sitharaman will go down as the worst finance minister's after 1990.

[Jambhalheart]

indian economy ki last 20 yrs lo vachina growth ee corona tho pothundhi emo

[Ryzen_renoir]

2 minutes ago, Jambhalheart said:

indian economy ki last 20 yrs lo vachina growth ee corona tho pothundhi emo

Nah bro if they change the stubborn attitude towards inflation and non Chinese imports they can turn around in a year .

I have firm belief that even our local leaders would make a better finance minister than the current  BJP batch , even most of baffas will agree in private

[Kool_SRG]

5 minutes ago, Jambhalheart said:

indian economy ki last 20 yrs lo vachina growth ee corona tho pothundhi emo

ee vanka baa dorikindhi...

[AndhraneedSCS]

Corona peru cheppi .. economy ni nakinchesi.. tarvatha growth chupistaru emo 

[dewarist]

48 minutes ago, Kool_SRG said:

ee vanka baa dorikindhi...

[dasari4kntr]

[chanchala]

55 minutes ago, Ryzen_renoir said:

Nah bro if they change the stubborn attitude towards inflation and non Chinese imports they can turn around in a year .

I have firm belief that even our local leaders would make a better finance minister than the current  BJP batch , even most of baffas will agree in private

indian economy has tremendous scope for growth, especially with the rise of nationalist chest thumping morons and the overall positive outlook of most in India.

If a govt can fcuk even this up, says that either that govt is grossly incompetent, or plain doesn't want India to grow.

[dewarist]

Entaina nirmala taayi cover drives super...oka sari ola/uber moolanga car sales padipoyayi antadi, hum pyaaz nahi khaate hai antadi and this is epic, devudi meede