highlights-of-41st-gst-council-meeting

Highlights of 41st GST Council Meeting

Home » Learn » GST » Highlights of 41st GST Council Meeting

Highlights of 41st GST Council Meeting

The focus area of the 41st GST Council Meeting, held on 27th August 2020, was the only shortfall of GST compensation and ways to compensate the states for the revenue shortfalls.

Noticeably, the 41st GST Council Meeting was conducted via video conferencing under the Chairmanship of the Finance Minister, Shrimati Nirmala Sitharaman. The current article summarizes the key highlights of the GST Council Meeting.

Options made available to states to meet the shortfalls

The figurative working says that the total shortfall for the Financial Year 2020-2021 works out to be INR 2,35,000 Crores. Out of the said total shortfall of INR 2,35,000, only INR 97,000 Crore relates to a shortfall on account of GST implementation. The remaining shortfall is marked as a shortfall on account of COVID-19 pandemic.

In order to meet the shortfall, the states are given two options. The two options so available with the states are explained hereunder-

OPTION 1 – State borrowings via Centre facilitation-

  • Under this option, the Centre can facilitate the shortfall occurred only on account of GST implementation i.e. INR 97,000 Crore,
  • The borrowings will be possible through a special window by the Reserve Bank of India (RBI),
  • The borrowings can be repaid after 5 years on the collection of the cess, and
  • A reasonable rate of interest will be payable on such borrowings.

OPTION 2 – State direct borrowings from RBI –

Under this option, state can go for direct borrowing to the extent of INR 2,35,000 Crores from the RBI.

The states are required to communicate the selected option within a period of seven working days.

Certain clarifications

While addressing the press, certain clarifications were given. The said essential clarifications are-

  • The Government will provide further 0.5% relaxation in the state borrowings limit under the FRBM Act. The relaxation will facilitate the states to borrow more funds.
  • The above arrangement will remain valid only for the Financial Year 2020-2021. For the period from April 2021, the situation will be further re-assessed and decide accordingly.

Other Related Guides

GST Deemed Exports – Applicability & Re... GST Deemed Exports - Applicability & Refund Deemed exports have been introduced as a category of supply under the Goods and Services Tax. The fol...
Penalty for Non Generation of e-Way Bills Penalty for Non Generation of e-Way Bills As per GST law, all the supplier or transporters must carry a GST e-way bill if the movement of goods worth...
27th GST Council Meeting 27th GST Council Meeting The GST Council held the 27th GST Council Meeting on May 4th, 2018, over video conferencing. In the 27th GST Council Meeting...
GST Cess on Sugar GST Cess on Sugar The Sugar Cess Act, 1982 was introduced with an objective to increase the accumulations of the Sugar Development Fund. The fund so ...
CGST Sixth Amendment Rules-2019 CGST Sixth Amendment Rules-2019 On October 9, 2019, the Government of India (GoI) has notified Sixth Amendment Rules, 2019, which have made some impo...

Post by poonamgandhi

CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.