Finance Minister Nirmala Sitharaman announced on Monday that this year’s Goods and Services Tax compensation cess worth Rs 20,000 crore will be disbursed to the states by night, a government press release said.
Moreover, Rs 24,000 crore IGST will be distributed to the states that had received less than their fair share, by the end of next week. The finance minister also said that states that have received more than their due share will not be asked to pay it back. Sitharaman said that earlier there was no formula for devolution of IGST, which resulted in several anomalies in its distribution.
Sitharaman made the announcements after chairing the 42nd meeting of the GST Council.
“From the first of January onwards, the taxpayers whose annual turnover is less than Rs 5 crore will not be required to file monthly returns, i.e. GSTR 3B and GSTR1,” Finance Secretary Ajay Bhushan Pandey said according to ANI. “They will only file quarterly returns.”
Many states had been demanding clearance of GST dues. Opposition parties had also staged a protest outside Parliament demanding payment of dues. On August 27, the Ministry of Finance had said that the coronavirus pandemic severely hit GST collection, creating a deficit of Rs 2.35 lakh crore for the 2020-’21 fiscal year.
The Centre had then on August 30 formally proposed two options for borrowings to meet the shortfall and given states seven days to choose one of them. The first option was that the states may borrow the full compensation deficit of Rs 2.35 lakh crore via a special window in consultation with the Reserve Bank of India. The second option entailed borrowing the entire projected shortfall of Rs 2.35 lakh crore this year, facilitated by the central bank.
However, some states like Kerala and Chhattisgarh rejected both options. On Monday, Sitharaman said 21 states had decided to take the first option. She also said it is untrue that the states which did not opt for either solution would be left to fend for themselves.