AG’s view on borrowing to meet cess shortfall to be discussed by GST Council
Gross Goods and Services Tax revenue slid 14% last month to ₹87,422 crore, from the ₹1,02,083 crore collected in July 2019, data released by the Finance Ministry on Saturday show. Receipts were also almost ₹3,500 crore less than June’s collections.
The data was released on a day when a senior Finance Ministry official said an opinion had been received from the Attorney General on the legality of market borrowings to bridge any shortfall in the GST compensation fund.
“Preliminary discussions were held during the GST Council meeting in June, and it was decided to seek legal opinion on market borrowings,” the official told journalists, admitting that the Council which was originally slated to discuss this issue in July was yet to set a date for its next meeting. “The opinion has come, and we will soon hold an exclusive GST Council meeting on the compensation issue,” the official, who spoke on the condition of anonymity, added.
Press Trust of India reported, citing sources, that the Attorney General had opined that there was no obligation on the Union government to make good the shortfall in GST compensation payable to the States.
Cess collections, needed to pay compensation to States’ for the first five years of the GST regime, fell short by 42% in 2019-20, with the Centre forced to use cess collected in previous years as well as a previous transfer from the Consolidated Fund of India.
In July, cess collections amounted to ₹7,265 crore, 15% less than the ₹8,551 crore collected in the same period in 2019.
Central GST (CGST) revenue for July was ₹16,147 crore, State GST (SGST) was ₹21,418 crore, and integrated GST (IGST) ——which is to be split between States and Centre — was ₹42,592 crore.
“The revenues for the last month [June] were higher than the current month [July]. However, it is important to note that during the previous month, a large number of taxpayers also paid taxes pertaining to February, March and April 2020 on account of the relief provided due to COVID-19,” the Finance Ministry said in a statement.
“It may also be noted that taxpayers with turnover less than ₹5 crore continue to enjoy relaxation in filing of returns till September 2020,” it added.
Data also showed that a decline in imports had hit tax collections in July. GST revenue from import of goods only reached 84% of the amount collected in the same month last year, while revenue from domestic transactions, including import of services, reached 96% of last July’s collections.
With inputs from The Hindu