FinMin denounces any claims that the Centre will back away from their claims of providing compensation for Revenue Shortfall due to GST implementation

The Finance Ministry has categorically stated that any shortfall in compensation will be compensated by the Centre, irrespective of whether it is being caused by GST implementation of the COVID-19 pandemic.

There has been a massive GST revenue shortfall for the States and the GST Council had given them certain options to choose from to plug the GST compensation gaps.

Under Option 1, States can borrow Rs 97,000 crore now and once the borrowing has been repaid the remaining compensation will be paid to them. Under Option 2, the States can borrow the entire amount now, According to the Finance Ministry, the second option is much less favourable as the private sector is already struggling due the Pandemic and this will only add further pressure on them.

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Sources from the Finance Ministry have entirely denounced and claims and/or media reports that the Centre will back away from its promise of making up for the shortfall caused by the implementation of GST. The Finance Ministry has categorically stated that any shortfall in compensation will be compensated by the Centre, irrespective of whether it is being caused by GST implementation of the COVID-19 pandemic.

Sources from the Finance Ministry said, “It has never been the stand of the Union Finance Minister to not compensate the loss of revenue due to COVID-19. The central government has, time and again, committed that the entitlement of the states would always be for full compensation. The entire compensation sum on account of shortfall in collections of Goods and Services Tax (GST) will be paid and honoured.”