New Delhi: Amid a chorus by non-NDA ruled states for compensation of GST revenue shortfall, the Centre on Thursday presented two options to states under which they can borrow from the market to make up for the estimated deficit of Rs 2.35 lakh crore.
At the end of a five-hour long meeting of the GST Council, Finance Minister Nirmala Sitharaman said there was no proposal to raise tax rates to make up for the shortfall that has been compounded by the COVID-19 pandemic.
Citing a legal opinion from the Attorney General, she ruled out the Centre making good the shortfall from either its coffers or borrowing against its balance sheet.
The deficit can be made good by states borrowing using a special window, she said, adding this loan can be repaid after five years from the collection of GST cess.
If states agree to either of the options, it would effectively mean that cess would continue beyond five years of the GST rollout.