The coronavirus pandemic has impacted goods and services (GST) collection and the shortfall is ₹2.35 lakh crore for fiscal 2021, Finance Minister Nirmala Sitharaman said on August 27, adding that the coronavirus pandemic was ‘an act of God’ and an unforeseen factor that had hit GST collections.

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

GST collections including compensation cess to the states had been falling short of targets much before the COVID-19 pandemic. The GST Council meeting was held on Thursday amid increasing pressure from states demanding compensation for revenue shortfall amid the ongoing pandemic.

The Council considered two options to pay off the states including borrowing from the Reserve Bank of India.

‘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,’ the Finance minister said.

Many Congress-ruled states and those run by other parties have said that the centre has a ‘statutory obligation’ of paying GST dues to them. The centre, however, says that 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 recently tweeted.

Also Read: Centre Unable To Pay GST Dues To States, UTs: Union Finance Secretary