GST Council · 2020-08-27 · Video conference

41st GST Council meeting: key decisions

The 41st meeting was devoted to the shortfall in compensation to States caused by the Covid-19 slump in revenue and cess collections. The Centre presented an estimate of the shortfall for 2020-21 and separated the part attributable to GST implementation from the part caused by the pandemic. Two borrowing options were offered to States to meet the gap, to be repaid from compensation cess collected beyond the original five-year period. States were given time to choose.

Chaired by Nirmala Sitharaman, Union Finance Minister.

Other

  • Took stock of the compensation shortfall for 2020-21, distinguishing the gap due to GST implementation from the gap caused by the Covid-19 pandemic.
  • Placed two options before States: borrowing an amount equal to the GST implementation gap through a special window coordinated with the RBI, or borrowing the full shortfall from the market.
  • Indicated that the borrowings and their servicing would be met from compensation cess, requiring the cess to continue beyond June 2022.
  • Gave States time to communicate their choice of option.

Official documents

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