One of the options is to let states borrow from the Reserve Bank of India (RBI) to the extent of their GST revenue shortfall that can be attributed to the indirect tax reform of GST implementation in 2017
New Delhi: Federal indirect tax body the Goods and Services Tax (GST) Council on Thursday gave states a week to decide between two options offered to them for bridging their GST revenue shortfall which the central government is obliged to make up for till 2022.
One of the options is to let states borrow from the Reserve Bank of India (RBI) to the extent of their GST revenue shortfall that can be attributed to the indirect tax reform of GST implementation in 2017, said finance secretary Ajay Bhushan Pandey. Their revenue shortfall on account of the economic slowdown and the pandemic will not be covered by this.
If states opt for this option, they could avail of loans to the tune of ₹97,000 crore in FY21 from the RBI. This is a portion of the total funds needed if they are to be compensated as per the formula of 14% annual growth in revenue receipts taking 2015-16 as base year. That works out to Rs. 2.35 trillion.
Source: livemint
