GST row: 13 States go in for Centre’s burrowing option, 6 more to follow


New Delhi: Finance Ministry sources said 13 states have given their borrowing options relating to GST to meet shortfall in compensation amid COVID pandemic.

The sources said six more states such as Goa, Assam, Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh are likely to send their options in a couple of day.

The  states  which opted for “Option 1” are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tripura, Uttar Pradesh, Uttarakhand and Odisha. Manipur is the only state which has opted for “Option 2”, the sources added.

According to the first option, states are allowed to borrow the tax collection shortfall due to the switch to the GST which stands at ₹ 97,000 crore.

The states can borrow the entire compensation shortfall of ₹ 2.35 lakh cr if they opt for the second option.

The Finance Ministry sources said that two options were decided by the GST Council in a meeting on August 27.

The Attorney General said it is the GST Council which has to find ways to meet the shortfall in compensation and not the central government. Therefore, the states were offered two options to borrow.

The recent GST Council deliberated the current economic scenario as it was not be possible to hike the tax rates or carry out rationalisation to meet the compensation shortfall.

It was, however, agreed that borrowing could be an option to address this issue. The sources said the Centre is trying its best to help the states to meet the compensation shortfall through borrowing.


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