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Compensation shortfall : GST dues stuck, states told to borrow via RBI ! Is fundlessness bounded Tripura Govt to increase taxes, electric bills ?
TIWN Aug 28, 2020
Compensation shortfall : GST dues stuck, states told to borrow via RBI ! Is fundlessness bounded Tripura Govt to increase taxes, electric bills ?
PHOTO : Tripura CM Biplab Deb, Union Finance Minister Nirmala Sitharaman (File Photo)

AGARTALA, Aug 28 (TIWN): Amid fuel prices hikes, imposition of taxes, shortage of funding has been felt from a long time in state. Now, with the GST shorfalls questions are being raised whether these are the reasons that Tripura Govt is desperately increasing taxes, electric bills along with other various charges etc due to lack of funding ? Referring to the Covid pandemic as an ‘Act of God’ that will result in a contraction of the economy in the current fiscal, Finance Minister Nirmala Sitharaman said that in the 41st meeting of the Goods and Services Tax (GST) Council Thursday, states were presented with two options to resolve the contentious issue of compensation shortfall estimated to be Rs 2.35 lakh crore.

State finance ministers, who in the meeting insisted on the borrowing to be done by the Centre to make up for revenue shortfall, later said there was lack of clarity regarding the proposals that were brought towards the end of the five-hour meeting. They also termed the move to make a distinction in the revenue shortfall on account of GST implementation and the pandemic as “unconstitutional”. 

The first option for states includes a special window to be provided, in consultation with the RBI, for borrowing the projected GST shortfall of Rs 97,000 crore and an amount that can be repaid after five years of GST implementation ending 2022 from the compensation cess fund.  The second option is to borrow the entire projected shortfall of Rs 2.35 lakh crore — both on account of faltering GST collections and the expected shortfall due to the pandemic — under a special borrowing window facilitated by the RBI.

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