Union Finance Minister says GST collection has been severely affected by COVID-19, shortfall is ₹ 2.35 lakh crore for fiscal 2021

Union Finance Minister Nirmala Sitharaman on Thursday said that the COVID-19 pandemic had severely affected collection of the goods and services tax (GST) collection leading to a shortfall of ₹ 2.35 lakh crore for fiscal 2021. She said this after a meeting of the decision-making body for fixing GST policies. Sitharaman also called it “an act of god” that had affected the GST collections and added that “we may even see a contraction”.

She added that the Centre had released over ₹ 1.65 lakh crore as GST compensation to the states for fiscal 2020. In the past week, especially on Wednesday, there has been huge pressure from the Opposition-ruled states about the Centre not releasing GST dues. At a meeting called by Congress chief Sonia Gandhi and Trinamool chief Mamata Banerjee, chief ministers of Opposition political parties decided to put up a fight against the Centre’s various policies, and rued that GST compensation was not being released to them.

The states have also earned less due to the lockdown imposed for months in order to contain the spread of COVID-19. The Congress on Tuesday issued an official statement saying the Centre was committing a “sovereign fault” by not releasing the GST compensation to the states. West Bengal chief minister has been repeatedly mentioning its Rs 431 crore GST due that the Centre is supposed to release.

In today’s GST meeting, options to pay the state included borrowing from the Reserve Bank of India (RBI). Further discussions are being taken with the states by the Central government on this.