Wednesday, November 25, 2020
Home Latest india news GST Council decides to extend compensation cess on luxury goods, tobacco beyond...

GST Council decides to extend compensation cess on luxury goods, tobacco beyond June 2022: Sitharaman

The 42nd edition of Goods and Services Tax Council meeting was held via video conferencing on October  5, 2020. The meeting concluded with the government agreeing to extend the cess on taxes on luxury goods including cars and tobacco products beyond 2022.

Levy of Compensation Cess to be extended beyond the transition period of five years beyond June, 2022, for such period as may be required to meet the revenue gap. Further details to be worked out, the ministry said in a statement.

The central government, already facing a shortfall in tax receipts, has asked the states to borrow up to 1.1 lakh crore ($15.05 billion) from the market in the current fiscal year ending in March 2021, as the surcharge collections would not be sufficient to compensate them.

The finance minister Nirmala Sithraman said compensation cess collected this year amounting to about 20,000 crore will get disbursed to all states by tonight.

The Centre in August gave two options to the states to borrow either Rs 97,000 crore from a special window facilitated by the RBI or Rs 2.35 lakh crore from the market.

While the BJP ruled states and other allies had, till mid-September opted to borrow 97,000 crore to meet the GST revenue shortfall in the current fiscal, most opposition ruled states including Kerala, Punjab, Delhi, Telangana, Chhattisgarh, and Tamil Nadu rejected the Centre’s proposal of borrowing to meet the shortfall. 

10 states demand that full compensation should be paid to the states during the current year as per clauses in the law and centre should borrow, said Thomas Issac, finance minister of Kerala, referring to the central government.

Briefing reporters after the GST meeting, Sitharaman said the GST Council has taken up the long-pending issue of Integrated Goods and Services Tax. Earlier there was no formula for devolution of Integrated Goods and Services Tax (IGST), which had resulted in several anomalies in its distribution, she said.

The panel, which decides on tax rates and structure after 17 central and state taxes such as excise duty and VAT were subsumed into Goods and Services Tax (GST), will meet again on October 12 to thrash out the state compensation issue, Union Finance Minister Nirmala Sitharaman added.

Most Popular

Cyclone Nivar intensifies into severe cyclonic storm, to hit Tamil Nadu, Puducherry coasts tonight

Cyclone Nivar is set to hit coasts of Tamil Nadu and Puducherry by Wednesday night, according to the Met department. Nivar has...

Congress veteran Ahmed Patel passes away at 71 after battling Covid-19 complications

Veteran Congress leader Ahmed Patel breathed his last at Gurgaon hospital on Wednesday morning. The Rajya Sabha MP was battling Covid-19 infection...

Uttar Pradesh passes ordinance against love jihad

In cases of forced mass conversions, the ordinance provides for jail term of 3-10 years with Rs 50,000 penalty. If a person wants to perform marriage after converting into any other religion, they will need to take permission from DM 2 months before marriage.

Heavy rains in Tamil Nadu, Puducherry as Cyclone Nivar nears land

The World Meteorological Organisation’s panel prepared a list that suggests the cyclonic storm Nivar is expected to make a landfall between Mamallapuram in Tamil Nadu and Karaikal district in the Puducherry region.