GST Council meet to centre on shortfall compensation

The key deliberation at the 43rd meeting of the Goods and Services Tax (GST) Council on Friday will likely be centred around an acceptable mechanism to compensate states for an estimated ₹1.5 lakh crore revenue shortfall in 2021-22 due to the second wave of Covid-19 pandemic, people aware of the matter said.

States, particularly those ruled by non-bjp and non-nda parties, are alarmed by an over 60% fall in e-way bills this month (₹28.2 million as on May 23) from a peak of ₹71.2 million in March 2021, when

business activities had resumed almost in their entirety after the first wave, at least four officials from the federal government and states said on condition of anonymity.

A sharp fall in e-way bills indicates a contraction in revenue. “The significant decline in the e way bills which reflect movement of goods, accompanied by the deceleration in the services sector, aviation, hospitality, entertainment, etc, will have an impact on GST collections for transactions in April and May,” MS Mani, senior director at Deloitte India said.

One of the officials, who works for a state government, said, “Compensation requirement this fiscal year is expected to cross ₹1.5 lakh crore if the economy doesn’t recover from the spell of Covid-19 by the next quarter.”

In a letter to Union finance minister Nirmala Sitharaman, West Bengal finance minister Amit Mitra estimated the shortfall in the current financial year at ₹1,56,164 crore “without taking into consideration the impact of Covid wave-2”, NEW DELHI: THE GST COUNCIL IS MEETING ON FRIDAY AFTER A GAP OF OVER SEVEN MONTHS