New Delhi: Union Finance Minister Nirmala Sitharaman announced on Monday that the Centre is releasing compensation of Rs 20,000 crore to States tonight towards loss of revenue during 2020-21 and an amount of about Rs 25,000 crore towards IGST of 2017-18 by next week.
She stressed that no state will be denied compensation arising out of GST or Covid-19 pandemic and added that borrowing has to be done.
Briefing reporters after a virtual media briefing on the outcomes of the 42nd GST Council meeting, she said several decisions were taken at the day-long meeting. She announced that the Compensation cess collected this year so far – amounting to approximately Rs 20,000 Crore – will get disbursed to all states tonight.
She said the GST Council has taken up the long-pending issue of Integrated Goods & Services Tax.
Earlier there was no formula for devolution of IGST, which had resulted in several anomalies in its distribution, she maintained.
‘We have been wanting to come up with a solution to resolve the issue without causing a burden on states which had received more IGST than they should have,’ she said.
A Committee under Chairpersonship of Bihar Minister Sushil Kumar Modi has worked out a way to resolve IGST devolution issue, Sitharaman said.
She said Rs 24,000 Crore which has to go to states that received less will get the amount now, adding that ‘We aren’t asking states that received more to pay back dues now.’
The GST Council will meet on October 12 to further deliberate on compensating states for GST cess shortfall, Sitharaman said.
Finance Secretary Ajay Bhushan said from January 1, 2021, taxpayers with annual turnover less than Rs 5 Crore need not file monthly returns (GSTR-3B and GSTR-1) and quarterly returns will do.
However, since states require money every month, payments can be made through challan every month, even though returns can be filed every quarter
‘GST Council’s decision to make returns for small taxpayers on quarterly basis rather than monthly basis will be a major relief to small taxpayers. Number of returns comes down from 24 monthly returns to eight returns, from 1st January 2021,’ he said.
He said refunds will be given only to those bank accounts which are validated with PAN and Aadhaar.
‘This has been decided in order to check tendencies of some companies to receive refunds and then disappear,’ the Finance Secretary said.