Stormy GST meet likely

New Delhi: The issue of delay in giving promised compensation for loss or revenue arising from implementation of GST is likely to rock the GST council meeting to be held on Thursday.

The protest is likely to vociferous from the non BJP ruled states. Though the Telangana and Andhra Pradesh too would be demanding that the dues be cleared at the earliest, they may not join the other state Chief Ministers in the protest during the 41st meeting of GST council which would be held via video conferencing.

Sources said the options being explored are market borrowing, raising cess rate or increasing the number of items for levy of compensation cess. Discussion on correction in inverted duty on certain goods like textiles and footwear is also likely.

The Opposition party-ruled states are miffed over the recent statement of the Attorney General K K Venugopal that the Centre was not legally bound to make up from its coffers any shortfall in GST revenues of states.

Sources had earlier indicated that following the AG's opinion, states may now have to look at market borrowings to make good their respective revenue shortfall and the GST Council will take a final call.

He had said so in response to the views sought by the Centre on the legality of market borrowing to make good the shortfall in the compensation fund -- a corpus created from levy of additional tax on luxury and sin goods to compensate states for revenue shortfall arising from their taxes being subsumed into GST.

Sources said the options before the Council for meeting the shortfall could be to rationalise GST rates, cover more items under the compensation cess or increase the cess, or recommend higher borrowing by states to be repaid by the future collection into the compensation fund. Under GST law, states were guaranteed to be compensated bi-monthly for any loss of revenue in the first five years of the GST implementation from July 1, 2017.