West Bengal Finance Minister Amit Mitra has urged finance minister Nirmala Sitharaman to convene a long-pending meeting of the GST Council immediately, as states are expecting an alarming shortfall in Goods and Services Tax (GST) compensation because of devastations caused by the second wave of Covid-19.
“May I point out that among many matters that need to be discussed most urgently at the GST Council is the alarming shortfall that is expected in the compensation to states. As per GoI (Government of India) projection, the shortfall was expected to be to the tune of Rs 1,56,164 crore in 2021-22 without considering the impact of Covid wave 2,” Mitra said in the letter to the finance minister.
Mitra added that the compensation would be much higher due to the second wave and lockdowns than what was projected earlier. “This is undoubtedly deeply distressing,” he wrote. HT has seen a copy of the letter.
The Union finance ministry did not respond to an email query seeking comments.
At the time of introducing the new indirect tax regime in July 2017, the GST law assured states a 14% increase in their annual revenue for five years (up to 2022) and assured them that their revenue shortfall would be made good through the compensation cess levied on luxury goods and sin products.