A total of 13 states have so far decided on their borrowing options to meet their <keyword id="9933255" type="UNKNOWN" weightage="20" keywordseo="gst-compensation-shortfall">GST compensation shortfall</keyword> and almost all have decided to go for the first option proposed by the Centre, source said. Out of the 13, 12 states have opted for the first option, under which the Union government has offered states that they could borrow the shortfall arising out of GST implementation, estimated at Rs 97,000 crore approximately. The amount would be borrowed through issue of debt under a special window coordinated by the Finance Ministry. The first option is to ensure steady flow of resources similar to the flow under <keyword id="2600993" type="PERSON" weightage="20" keywordseo="GST-compensation">GST compensation</keyword> on a bi-monthly basis. Under this option, the Centre will endeavour to keep the cost at or close to the G-secs yield, and in the event of the cost being higher, will bear the margin between G-secs and average of State Development Loan yields up to 0.5 per cent through a subsidy. The states which have preferred to opt for this option are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tripura, Uttar Pradesh, Uttarakhand and Odisha. Only Manipur has so far opted for the second borrowing option under which states can borrow the entire compensation shortfall of Rs 2.35 lakh crore, including the Covid-impact portion, through issue of market debt. Six more states -- Goa, Assam, Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh -- will be giving their choice in a day or two, said people in the know. A few states have submitted their views to the Chairperson of the GST Council but are yet to decide on the options, according to sources. In the 41st GST Council meeting last month, the Centre had proposed both options, so that a mechanism could be put in place as an exception this year, as Covid-19 disruptions and lower revenue collections have made it difficult for the Centre to meet its obligation on Goods and Services Tax (GST) compensation to states. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-future-retail-ril-irctc-bhel-tata-motors-adani-green-vodafone-idea-godrej-properties-sunteck-realty-and-more/articleshow/78097615.cms">Top stocks to watch— Future Retail, RIL, IRCTC, BHEL, Tata Motors, Adani Green, Vodafone Idea, Godrej Properties, Sunteck Realty and more</a> <a href="https://www.businessinsider.in/india/news/delhi-police-arrests-umar-khalid-connection-with-northeast-delhi-riots/articleshow/78097740.cms">Delhi Police arrests Umar Khalid in connection with Northeast Delhi riots</a> <a href="https://www.businessinsider.in/tech/news/tiktok-owner-bytedance-rejected-microsofts-offer-for-the-apps-us-operations/articleshow/78097018.cms">TikTok owner ByteDance rejected Microsoft's bid for the app's US operations, Oracle reportedly chosen as US 'technology partner'</a>

13 states decide on GST compensation — only Manipur opts for borrowing entire shortfall in one go

States which failed to submit their options before the <keyword id="3680839" type="PERSON" weightage="20" keywordseo="gst-council-meeting">GST Council meeting</keyword> in October will have to wait for at least two years to get compensation on Goods and Services Tax collection shortfall expected during the transition period, Finance Ministry sources said on Monday. The sources said that such states will have to wait till June 2022 to get compensation dues, subject to the condition that the GST Council extends the cess collection period beyond 2022. This is so because the Council is expected to adopt one of the two options given by the Centre to meet the <keyword id="2600993" type="PERSON" weightage="20" keywordseo="GST-compensation">GST compensation</keyword> needs of the states this year. The states which decide against operationalisation of the new <keyword id="9971535" type="UNKNOWN" weightage="20" keywordseo="gst-compensation-formula">GST compensation formula</keyword> will get their dues only to the extent of compensation cess collected in FY21 and distributed in proportion among all states and union territories. The balance shortfall will only be met from the collection of GST compensation cess beyond the five-year transition period that ends in June 2022. This will be subject to GST Council approval to the extension of compensation cess. The GST Council, in its 41st meeting on August 27, 2020, had decided to give its member-states two borrowing options to meet their compensation shortfall and a response time of 7 working days from the formal receipt of the detailed proposal on the options by email. Almost 15 states had submitted their options by September 15 and more have joined since. Option-1 on GST compensation brought before the Council last month allows states to borrow, under a special dispensation from the Reserve Bank of India, a sum of about Rs 97,000 crore shortfall calculated by the Centre that is directly on account of GST implementation. Option-2 allows states to borrow the entire projected GST compensation shortfall of Rs 2,35,000 crore (total shortfall of Rs 3 lakh crore minus Rs 65,000 crore collected as GST compensation cess) for FY21. So far, 21 states/UTs have expressed preference for Borrowing Option-1 proposed by the Centre. With GST Act requiring voting for any resolution regarding an option by at least 20 states, the move is expected to be adopted by the GST Council at its meeting next month. If this option is indeed adopted, all states would be able to move ahead and borrow under the scheme suggested by the Centre to meet their shortfall arising due to GST switchover. If states still opt out, they will have to wait to get full compensation. Among the 21 states/UTs which support the first option on GST compensation are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tripura, Uttarakhand, and Uttar Pradesh. Manipur, the only state which had earlier opted for Option-2, later preferred to change it to Option-1. A few more states are, also, to give their borrowing option in a day or two. However, some of them like Jharkhand, Kerala, Maharashtra, NCT of Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal are yet to respond to the GST Council proposal to decide their options. Under the existing GST Act, compensation for shortfall in GST collections over an agreed formula is payable by the Centre for the first five years of the operation of the new tax system from July 2017 to June 2022. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/top-ten-phishing-examples-and-tricks-used-by-companies-to-test-their-employees-cybersecurity-smarts/slidelist/78228072.cms">Top ten phishing tricks that companies are using to test their employees’ cybersecurity smarts</a> <a href="https://www.businessinsider.in/stock-market/markets/news/indian-tech-companies-hcl-tech-wipro-infosys-tcs-share-price-are-green-today/articleshow/78228700.cms">It’s not just the DWS deal, Morgan Stanley's outlook has painted HCL Tech green⁠ — along with TCS, Infosys and Wipro</a> <a href="https://www.businessinsider.in/tech/apps/news/google-hits-back-at-paytm-reiterates-that-repeated-policy-violations-will-lead-to-stricter-actions/articleshow/78229677.cms">Google hits back at Paytm ⁠— reiterates that ‘repeated policy violations’ will lead to stricter actions</a>

States not choosing GST compensation options by October will have wait another two years

Even with consensus eluding the <keyword id="6355040" type="UNKNOWN" weightage="20" keywordseo="GST-Council">GST Council</keyword> meeting on Monday over adoption of borrowing option to settle compensation dues, the Finance Ministry has granted permission to 20 states to raise an additional amount of Rs 68,825 crore through open market borrowings towards the compensation shortfall. A Finance Ministry statement said that additional borrowing permission has been granted, at the rate of 0.50 per cent of the Gross State Domestic Product (GSDP), to those states who have opted for Option-1 out of the two options suggested by it to meet the shortfall arising out of GST implementation. In the meeting of GST Council held on August 27, two options were put forward and were subsequently communicated to the states on August 29. Twenty states - Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand - chose Option 1. Eight states are yet to exercise an option. Facilities available to the states that choose Option-1 inter-alia include: a special borrowing window, coordinated by the Finance Ministry to borrow the amount of shortfall in revenue through issue of debt. The total shortfall in the revenue of the states on this account has been estimated at around Rs 1.1 lakh crore. This option also allows states to borrow the final instalment of 0.5 per cent of GSDP out of the 2 per cent additional borrowings permitted by the government in view of the Covid pandemic, waiving the reforms condition. The Expenditure Department had, on May 17, had provided additional borrowing limit of upto 2 per cent of GSDP to the states. The final instalment of 0.5 per cent out of this 2 per cent limit was linked to carrying out at least three out of four reforms stipulated by the Centre. However, in case of states who have exercised Option-1, to meet the shortfall arising out of GST implementation, the condition of carrying out the reforms to avail the final instalment of 0.5 per cent of GSDP has been waived. As the centre has kept the borrowing window open despite differences on the mode of settling GST compensation, the 20 states, who have exercised Option-1, have become eligible to raise an amount of Rs 68,825 crore through open market borrowings. Action on the special borrowing window is being taken separately. As per the statement, Maharashtra has been permitted to borrow the maximum under the new option at Rs 15,394 crore. It is followed by Uttar Pradesh that will now make additional borrowing of Rs 9,703 crore this year while Gujarat will borrow Rs 8,704 crore. Though the window of borrowing is also open for states that have so far not opted for the new scheme, sources said that permission to these states may be delayed, depending on how talks between expenditure department and the concerned states progresses. States like Kerala, and Punjab wanted the Centre to borrow and pay GST compensation to them rather than putting the entire load on them. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/infosys-announce-second-quarter-earnings-on-october-14/articleshow/78640964.cms">VanGuard deal will be the highlight of Infosys' second-quarter earnings as investors look for a hike in guidance</a> <a href="https://www.businessinsider.in/business/corporates/news/wipro-board-approves-9500-crore-share-buyback-plan/articleshow/78638511.cms">Wipro board approves ₹9,500 crore share buyback plan</a> <a href="https://www.businessinsider.in/tech/news/oneplus-chinese-company-co-founder-carl-pei-exits-company-one-day-ahead-of-flagship-mobile-launch/articleshow/78634270.cms">OnePlus co-founder Carl Pei reportedly exits company one day ahead of flagship smartphone launch</a>

Government allows 20 states to meet GST compensation shortfall through open market borrowing

New Delhi, <keyword id="156153" type="COMPANY" weightage="20" keywordseo="Ministry-of-Finance">Ministry of Finance</keyword> has released the <keyword id="10470316" type="UNKNOWN" weightage="20" keywordseo="8th-weekly-instalment">8th weekly instalment</keyword> of ₹6,000 crore to the states to meet the <keyword id="9933255" type="UNKNOWN" weightage="20" keywordseo="gst-compensation-shortfall">GST compensation shortfall</keyword>. Out of this, an amount of ₹5,516.60 crore has been released to 23 States and an amount of ₹483.40 crore has been released to the three Union Territories (UT) with Legislative Assembly (Delhi, Jammu &amp; Kashmir &amp; Puducherry) who are members of <keyword id="9255807" type="COMPANY" weightage="20" keywordseo="the-gst-council">the GST Council</keyword>. The remaining 5 States, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of <keyword id="2406193" type="PERSON" weightage="20" keywordseo="GST-implementation">GST implementation</keyword>. The Government had set up a special borrowing window in October, 2020 to meet the estimated shortfall of ₹1.10 lakh crore in revenue arising on account of implementation of GST. The borrwoings are being done through this window by the Centre on behalf of the States and UTs. The borrowings have been done in 7 rounds. The amount borrowed so far was released to the states on October 23, November 2, 9, 23; December 1, 7, 14 and 21. The amount released this week was the 8th instalment of such funds provided to the States. The amount has been borrowed this week at an interest rate of 4.1902%. So far, an amount of ₹48,000 crore has been borrowed by <keyword id="1387403" type="COMPANY" weightage="20" keywordseo="the-central-government">the Central Government</keyword> through the special borrowing window at an average interest rate of 4.6986%. In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Government has also granted additional borrowing permission equivalent to 0.50% of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources. All the States have been given their preference for Option-I. Permission for borrowing the entire additional amount of ₹1,06,830 crore (0.50% of GSDP) has been granted to 28 States under this provision. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/heres-what-analysts-say-if-you-should-subscribe-or-not-to-the-300-crore-ipo-of-antony-waste-handling-cell/articleshow/79790998.cms">Antony Waste Handling Cell ₹300-crore IPO opens today — these are the risks and opportunities</a> <a href="https://www.businessinsider.in/business/startups/news/the-founder-of-sugar-cosmetics-explains-how-the-startup-clocked-a-60-growth-in-sales-during-the-pandemic/articleshow/79832966.cms">The founder of SUGAR cosmetics explains how the startup clocked a 60% growth in sales during the pandemic</a> <a href="https://www.businessinsider.in/business/startups/news/pine-labs-valuation-crosses-2-billion-as-it-raises-fresh-funds-from-lone-pine-capital/articleshow/79833738.cms">Pine Labs' valuation crosses $2 billion as it raises fresh funds from Lone Pine Capital</a>

8th weekly instalment of ₹6,000 crore released to states meet the GST compensation shortfall

Pre-packed and <keyword id="14314091" type="General" weightage="20" keywordseo="labelled-food-items" source="Orion">labelled food items</keyword> like meat, fish, curd, paneer and honey will now attract GST, a tax that will also be levied on the fee that banks charge for the issue of cheques. This after the <keyword id="6355040" type="General" weightage="50" keywordseo="gst-council" source="Orion">GST Council</keyword> - the highest decision-making body on the levy of goods and services tax - accepted most of the recommendations of a group of ministers from states on withdrawing exemptions with a view to rationalising the levy, officials said. The panel headed by <keyword id="161813" type="General" weightage="20" keywordseo="Union-Finance-Minister" source="Orion">Union Finance Minister</keyword> <keyword id="129243" type="General" weightage="50" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> and comprising representatives of all states and UTs, on the first day of the two-day meeting accepted the GoM's recommendation for reviewing the exemption from GST that packed and labelled food items currently get. So pre-packed and labelled meat (except frozen), fish, curd, paneer, honey, dried leguminous vegetables, dried makhana, wheat and other cereals, wheat or meslin flour, jaggery, puffed rice (muri), all goods and organic manure and coir pith compost will not be exempted from GST and will now attract a 5 per cent tax. Similarly, an 18 per cent GST will be levied on fee charged by banks for the issue of cheques (loose or in book form). Maps and charts including atlases will attract a 12 per cent levy. Goods that are unpacked, unlabelled and unbranded will continue to remain exempt from GST. Besides, a 12 per cent tax on hotel rooms below Rs 1,000/day will be levied, as against a tax exemption currently. GST rate rationalisation is important to boost the weighted average GST rate that has fallen to 11.6 per cent, against 14.4 per cent at the time of launch. The GST Council also recommended a correction in the inverted duty structure for a host of items, including edible oil, coal, LED lamps, printing/drawing ink, finished leather and solar water heater. The Council is likely to discuss on Wednesday the demand for an extension of compensation paid to states for revenue lost from their taxes such as sales tax (VAT) being subsumed into a national GST, besides a 28 per cent tax on casinos, online gaming and horse racing. Non-BJP ruled states such as Chhattisgarh want the compensation regime to be extended or the share of states in the GST revenues be increased to 70-80 per cent from the current 50 per cent. And to drive their point, they cited a recent <keyword id="6354977" type="General" weightage="50" keywordseo="supreme-court" source="Orion">Supreme Court</keyword> ruling that decisions made by the Council are not binding on states and any decision not taken unanimously could potentially lead to unraveling of the landmark economic reform. The report of the state finance ministers on GST systems reforms, which recommended biometric authentication of high risk taxpayers and real-time validation of bank accounts too was cleared by the Council. As per data on revenue growth collated for the Council meeting, only five out of 31 states/UTs, Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim, registered a revenue growth higher than the protected revenue rate for states under GST in financial year 2021-22. With regard to e-way bill on intra-state movement of gold, gold jewellery and precious stones to check evasion, the Council recommended that states can decide on the threshold above which the electronic bill is to be made mandatory. A panel of state ministers had recommended the threshold to be Rs 2 lakh and above.

Pre-packed meats, curds, paneer and puffed rice will now attract GST

(Eds: Adding details) New Delhi, Jul 1 () GST revenue collection in June stood at Rs 90,917 crore, up from Rs 62,009 crore mopped up in May and Rs 32,294 crore in April. The goods and Services Tax (GST) mop up was 9 per cent lower on a year-on-year basis in June, while it was 62 per cent down in May and fell 28 per cent in April. GST collections for the first quarter (April-June) of this fiscal declined 59 per cent, when compared to the same quarter last year as lockdown imposed to contain spread of COVID-19 pandemic severely impacted economic activity. "The revenues during the financial year has been impacted due to COVID-19, firstly due to the economic impact of the pandemic and secondly due to the relaxations given by the government in filing of returns and payment of taxes due to the pandemic. However, figures of past three months show recovery in GST revenues," the finance ministry said in a statement. States like Punjab, Chhattisgarh, Madhya Pradesh, Bihar, Assam, Andhra Pradesh, Telangana, Karnataka witnessed growth in collection in June over last year. North Eastern states like Sikkim, Manipur, Mizoram, Tripura, Nagaland, Arunachal Pradesh too witnessed Increase in revenue during the month. The gross GST revenue collected in the month of June, this year stood at Rs 90,917 crore of which Central GST is Rs 18,980 crore, State GST is Rs 23,970 crore, Integrated GST is Rs 40,302 crore (including Rs 15,709 crore collected on import of goods) and Cess is Rs 7,665 crore, the statement said. "The government collected gross #GST revenue of Rs 90,917 crore in June 2020, which is 91 per cent of the collections in June 2019," Office of Finance Minister Nirmala Sitharaman said in a tweet. During the month, the revenues from import of goods were 71 per cent and the revenues from domestic transaction were 97 per cent of the collections from these sources during the same month last year. The government has settled Rs 13,325 crore to Central GST and Rs 11,117 crore to State GST from Integrated GST as regular settlement. The total revenue earned by central government and state governments after regular settlement in June, stood at Rs 32,305 crore for Central GST and Rs 35,087 crore for the State GST. The government had allowed a relaxed time schedule for filing of GST returns and returns for the month of April, March as well as February got filed during June 2020. Some returns of May 2020, which would have otherwise got filed in June 2020, will get filed during first few days of July 2020, the Ministry added. EY Tax Partner Abhishek Jain said the GST collections while in the first quarter have obviously witnessed a substantial dip because of the current pandemic, however, the increasing trend in June inclines to a recovery being in line soon. "With this shortfall and related dip in revenue for states as well, the Centre's obligations to compensate States for any shortfall is an area of concern and this being further deepened with muted compensation cess collections," Jain added. Deloitte India Partner M S Manu said the June revenue numbers indicate that a revival is underway and collections will improve in the coming months. "In June some of larger producing states have shown an increase in collections or stable revenues compared to last year while some of the consuming states have shown a decline," Mani added. JD DRR DRR

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13 states decide on GST compensation — only Manipur opts for borrowing entire shortfall in one go

IANS

States not choosing GST compensation options by October will have wait another two years

IANS

Government allows 20 states to meet GST compensation shortfall through open market borrowing

IANS

8th weekly instalment of ₹6,000 crore released to states meet the GST compensation shortfall

IANS

Pre-packed meats, curds, paneer and puffed rice will now attract GST

PTI

GST collection in June at Rs 90,917 cr, Q1 mop up dips 59 pc due to COVID-19 lockdown

PTI