New Delhi | Jagran Business Desk: Finance Minister Nirmala Sitharaman on Monday said that the Centre and state governments "have not arrived at a consensus" over payment of GST compensation and noted that "differences exist".

Addressing the media after the 42nd GST Council meeting, Sitharaman said that the Centre cannot borrow to make up for GST shortfall of states as it will lead to "rise in borrowing cost". The Finance Minister, however, noted that it would not be the case if "states borrowed against future GST receipts".

"We were not able to arrive at a consensus. I appealed to all states, we have to quickly give answers to states who are fighting COVID-19 on the ground and who want money in their hands. That is how the GST Council meeting ended today," Sitharaman was quoted as saying by news agency ANI.

"We are open to anyone (State) who wants us to facilitate any loan. A lot of people have chosen Option 1, and some will approach us tomorrow morning. We are ready to deal with it," she added.

Sitharaman said that during Monday's GST Council meet some states asked some specific clarifications which were cleared by the Centre. Many of the clarifications were on the Attorney General's opinion on borrowing, GST Council's authority to extend cess collection beyond 5 years, she noted.

"The collection of cess is inadequate for paying compensation. This is absolutely apparent for everyone to see and because it is something which was never envisaged, the shortfall will be now be met by borrowing," Sitharaman was quoted as saying by ANI.

The GST Council in its previous meeting last week had decided to extend the surcharge on taxes on luxury goods such as cars and tobacco products beyond June 2022 but failed to reach a consensus on ways to compensate states for loss of tax revenue.

Meanwhile, the Centre had in August given two options to the states -- to borrow either Rs 97,000 crore from a special window facilitated by the RBI or Rs 2.35 lakh crore from the market. It had also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing. Later, the it released Rs 20,000 crore to the states towards compensation shortfall so far in the current fiscal.

(With agency inputs)

Posted By: Aalok Sensharma