Amid a chorus by non-NDA ruled states for compensation of GST revenue shortfall, Kerala finance minister Thomas Isaac tweeted, “Now that we fully understand Centre’s intentions on GST Compensation we have no choice other than to reject them lock, stock and barrel. No state with Atmanirbhar can accept them. Enough is enough. No more surrender of states rights. GST Compensation is our constitutional right.”
The Centre on Thursday presented two options to states under which they can borrow from the market to make up for the estimated deficit of Rs 2.35 lakh crore this fiscal.
At the end of a five-hour long meeting of the GST Council last week, Finance Minister Nirmala Sitharaman said there was no proposal to raise tax rates to make up for the shortfall that has been compounded by the Covid-19 pandemic.
Citing a legal opinion from the attorney general, she ruled out the Centre making good the shortfall from either its coffers or borrowing against its balance sheet.
“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, to what percent I am not getting into. Therefore, we said that a portion (of compensation) which strictly is hardwired in the (GST) Act, we will arrange, give it to you…,” Sitharaman said.