Page 52 - GSTL_27th August 2020_Vol 39_Part 4

J108 GST LAW TIMES [ Vol. 39
GST Council meet : Centre-States tussle likely over
compensation — 41st Meeting slated for August 27
The Goods and Services Tax (GST) Council will hold its 41st Meeting on
August 27 to discuss the single-point agenda of compensation to States for reve-
nue losses under the indirect tax regime. Several options including expanding
the ambit of Compensation Cess, market borrowing to fund compensation deficit
along with a future plan for rate rationalisation beginning from correction of in-
verted duty structure for some items are expected to be discussed in the meeting,
officials said.
The meeting is expected to see a tussle between States and the Centre, as
they have already voiced differing opinions on the proposal for market borrow-
ing. A legal opinion by the Attorney General of India is learnt to have put the
ball squarely in the Centre’s Court,’ stating that the Centre does not have the ob-
ligation to pay for revenue shortfall and the Council can recommend to the Cen-
tre to allow the States “to borrow on the strength of the future receipts from the
compensation fund”, with the Central Government to take the “final decision in
the matter”.
States, on the other hand, are of the view that the compensation fund is
unlikely to have enough funds, so it won’t have enough funds to cover for the
borrowing by States. Some of them have instead suggested raising tax rates and
bringing more items into the ambit of Compensation Cess to shore up revenues.
States such as Punjab, Kerala and Bihar are not in favour of being asked
to borrow to bridge the revenue gap, which will be then repaid from the Com-
pensation Cess fund. Punjab has suggested five measures - ad valorem Compensa-
tion Cess to factor in inflation, subsuming Central Excise duty on cigarettes and
tobacco products in Compensation Cess, settlement of pending IGST dues, bring-
ing back certain items into the 28 per cent tax slab, and inclusion of services con-
sumed by rich in the topmost 28 per cent slab - as possible solutions to reduce the
revenue gap and hence the burden of compensation to States. The rest of the
shortfall in compensation could be then paid by borrowing by the Centre.
Bihar has also said that borrowing by States or the Centre, if to be repaid
from the Compensation Cess fund, is not feasible and that the Council should
consider raising GST rates, sooner or later.
On August 1, Finance Minister Nirmala Sitharaman said the Attorney
General’s view on GST compensation was sought after consultation with States
and a meeting of the Council would be held to discuss the legal opinion.
[Source : The Indian Express, New Delhi, dated 20-8-2020]

New GSTN functionality allows taxpayers to know ITC
eligibility at the invoice level
The Goods & Services Tax Network (GSTN) on 18-8-2020 switched on a
new functionality to assist 14 lakh assessees in better compliance.
With the help of the new functionality, the assessees will know their ex-
act eligibility of Input Tax Credit (ITC) flowing in their annual returns and there-
by filing the annual return, that is, GSTR-9 more conveniently. This will help
GST LAW TIMES  27th August 2020  52
( A108 )