The GST Council, headed by FM Nirmala Sitharaman, will on Friday hold the GST Council meeting in order to discuss the impact of COVID-19 on tax revenues and to decide the framework for compensation payout to states, as per the sources.
This meeting will be the 40th GST Council meeting and will take place via video conferencing.
Further, the council is also expected to discuss the abdication of late fees for non-filing of GST returns for the period August 2017 to January 2020.
There won’t be any change in tax rates, however, the Council will decide new ways to collect tax funds in order to compensate states for the revenue loss that happened due to the Goods and Services Tax (GST) implementation, sources said.
According to the sources, the council is also expected to discuss the severe impacts of the coronavirus pandemic on revenue collection of the states and the Centre and strategies to break the revenue gap between the two.
The government has ceased releasing the monthly Goods and Services Tax revenue collection figures for April and May because of the dismal in fund collection and extended deadline for filing returns.
The last council meeting was held on March 14, 2020, in that meeting FM Nirmala Sitharaman had said that the Central government will look into the validity of the GST Council borrowing from the market to satisfy the compensation requirements.
With the states reporting about the shortfall in compensation, there were discussions on resorting to market borrowing to meet the revenue collections of the states.
In GST law, the states were guaranteed to be compensated for any loss in the revenue in the first five years of the GST implementation that started from July 1, 2017.
The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the bottom year of 2015-16.