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Centre releases 14th installment of Rs 6,000 crore to states to meet GST compensation shortfall

Centre releases 14th installment of Rs 6,000 crore to states to meet GST compensation shortfall

The Centre has released the 14th instalment of Rs 6,000 crore to states as a back-to-back loan to meet the compensation shortfall in collection of goods and services tax, taking the total amount released so far through the special borrowing window to Rs 84,000 crore, the finance ministry said on Monday.

“Till now, 76% of the estimated GST compensation shortfall has been released to the states & UT with legislative assembly,” the ministry said.

Of this amount, Rs 76,616.16 crore has been released to the States and an amount of Rs 7,383.84 crore has been released to the 3 UTs with Legislative Assembly.. Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

The amount was borrowed this week at an interest rate of 4.6144%, while the average interest rate was 4.7395%.

An additional borrowing permission of Rs 1,06,830 crore has been granted to the states, it added, equivalent to 0.5% of their gross domestic product.

All states have now taken the Rs 1.1 lakh crore option, where the Centre will borrow the amount and transfer it to the states as loans.

The Centre had offered the state two borrowing options – Rs 97,000 crore and Rs 2.35 lakh crore – with different sets of conditions for each to meet the GST compensation shortfall. The Centre sweetened the first option by increasing the borrowing to Rs 1.1 lakh crore.

Some states initially declined to take any of the options but later chose the first option. The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall arising on account of implementation of GST.

Source: Economic-Times

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Govt releases Rs 6000-cr 13th installment to states for GST shortfall compensation

Govt releases Rs 6000-cr 13th installment to states for GST shortfall compensation

The Ministry of Finance released the 13th weekly instalment of Rs. 6,000 crore to the states on Monday, January 25, to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore was released to 23 states and an amount of Rs 483.40 crore was released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry) who are members of the GST Council. The remaining 5 states, Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation.

Till now, 70 percent of the total estimated GST compensation shortfall has been released to the states and UTs with Legislative Assembly. Out of this, an amount of Rs 71,099.56 crore has been released to the states and Rs 6,900.44 crore has been released to the 3 UTs with Legislative Assembly.
The Central government had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs. 1.10 lakh crore in revenue arising on account of implementation of GST.

The borrowings are being done through this window by the Central government on behalf of the states and UTs. So far 13 rounds of borrowings have been completed so far starting from October 23, 2020.

The amount released this week was the 13th instalment of such funds provided to the states. The amount has been borrowed this week at an interest rate of 5.30%. So far, an amount of Rs 78,000 crore has been borrowed by the Central government through the special borrowing window at an average interest rate of 4.7491%.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the government also granted additional borrowing permission equivalent to 0.50 % of Gross States Domestic Product (GSDP) to the states choosing Option-I to meet GST compensation shortfall to help them in mobilising additional financial resources.

All the states have given their preference for Option-I. Permission for borrowing the entire additional amount of Rs. 1,06,830 crore (0.50 % of GSDP) has been granted to 28 states under this provision.

Source: ETNowNews

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FinMin releases weekly installment of Rs 6,000 cr to states to meet GST compensation shortfall

FinMin releases weekly installment of Rs 6,000 cr to states to meet GST compensation shortfall

The Finance Ministry on Monday released the 12th instalment of Rs 6,000 crore to states to meet the GST compensation shortfall, taking the total amount released so far under this window to Rs 72,000 crore.

The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of Rs 1.10 lakh crore in revenue arising on account of implementation of Goods and Services Tax (GST).

The ministry in a statement said it has released the 12th weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall.

Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and Rs 483.40 crore has been released to the 3 Union Territories (UT) with Legislative Assembly (Delhi, Jammu & Kashmir & Puducherry), who are members of the GST Council.

The amount has been borrowed this week at an interest rate of 4.43 per cent.

“Till now, 65 per cent of the total estimated GST compensation shortfall has been released to the States & UT with Legislative Assembly. Out of this, an amount of Rs 65,582.96 crore has been released to the States and an amount of Rs 6,417.04 crore has been released to the 3 UTs with Legislative Assembly,” the ministry said.

Thus, the total amount released so far in 12 instalments is Rs 72,000 crore at an average interest rate of 4.70 per cent.

The remaining five states — Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim — do not have a gap in revenue on account of GST implementation, the statement said.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the Centre has also granted additional borrowing permission equivalent to 0.50 per cent of Gross States Domestic Product (GSDP) to the states to help them in mobilising additional financial resources.

Permission for borrowing the entire additional amount of Rs 1,06,830 lakh crore (0.50 per cent of GSDP) has been granted to 28 states under this provision, the statement said.

Source: Financial-Express.

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Centre transfers Rs 42,000 crore to states after 7th weekly GST compensation tranche

Centre transfers Rs 42,000 crore to states after 7th weekly GST compensation tranche

The central government released the seventh weekly installment of Rs 6,000 crore under the first option of the goods and services tax (GST) compensation on Monday, taking the total amount provided to the states to Rs 42,000 crore.

From the latest tranche, 23 states would get Rs 5,517 crore and the three Union Territories of Delhi, Jammu and Kashmir and Puducherry will receive Rs 483 crore, a finance ministry statement said.

The five states of Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim do not have a gap in revenue on account of GST implementation, it added.

In October, after an arduous back-and-forth between the Centre and states on the issue, the government started releasing GST compensation tranches to the states through a special borrowing window.

The latest borrowing was done at a rate of 5.13%, taking the average interest rate at which borrowings were made under the window to 4.77%, the ministry said.

Karnataka received the highest amount under this window so far at Rs 5,668 crore, being among the early adopters of the option given by the Centre. This was followed by Rs 5,472 crore to Maharashtra and Gujarat’s Rs 4,213 crore.

Earlier in December, Jharkhand became the last state to select option one for GST compensation provided by the Centre of Rs 1.1 lakh crore. The state received Rs 184 crore in today’s tranche.

Source: Economic-Times

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GST compensation shortfall: Centre disburses another Rs 6,000 crore to states

GST compensation shortfall: Centre disburses another Rs 6,000 crore to states

The central government has released the sixth weekly instalment of Rs 6,000 crore to the states to meet the GST compensation shortfall, the government said on Wednesday. This amount has been borrowed at the interest rate of 4.2%.

The government has so far disbursed Rs 36,000 crore to states in back-to-back loan arrangement after borrowing the amount on behalf of states. The average interest rate for the borrowing under special window so far stood at 4.71%, the government said.

“Out of this, an amount of Rs 5,516.60 crore has been released to 23 states and an amount of Rs 483.40 crore has been released to the 3 union territories with legislative assembly (Delhi, Jammu & Kashmir and Puducherry) which are members of the GST Council,” the government said.

The government has calculated the GST compensation shortfall on account of implementation to be Rs 1.1 lakh crore this fiscal, an amount that would be paid to states by the end of FY 21 though borrowing as the designated cess fund is inadequate.

In addition to providing funds through the special borrowing window to meet the shortfall in revenue on account of GST implementation, the government has also granted additional borrowing permission equivalent to 0.5% of states’ GSDP to those choosing option-1 to meet GST compensation shortfall.

So far, permission for borrowing an additional amount of Rs 1,06,830 crore has been granted to 28 states under this provision, the government said.

Source: Financial-Express 

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GST compensation deadlock: Centre allows 20 states to mobilise Rs 68,825 crore

GST compensation deadlock: Centre allows 20 states to mobilise Rs 68,825 crore

The Centre on October 13 granted permission to 20 states to raise an additional Rs 68,825 crore through open market borrowings.

“Additional borrowing permission has been granted at 0.5 percent of the Gross State Domestic Product (GSDP) to those states who have opted for option 1 out of the two options suggested by the Ministry of Finance to meet the shortfall arising out of the Goods & Services Tax (GST) implementation,” the government said in a press release.

In the GST Council meeting held in August, two options were put forward. The 20 states that opted for option 1 are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Sikkim, Tripura, Uttar Pradesh and Uttarakhand.

Eight states are yet to exercise an option, the statement said.

Out of the total Rs 68,825 crore, Andhra Pradesh has been allowed to borrow Rs 5,051 crore, Arunachal Pradesh Rs 143 crore, Assam Rs 1,869 crore, Bihar Rs 3,231 crore, Goa Rs 446 crore, Gujarat Rs 8,704 crore, Haryana Rs 4,293 crore, Himachal Pradesh Rs 877 crore, Karnataka Rs 9,018 crore, Madhya Pradesh Rs 4,746 crore, Maharashtra Rs 15,394 crore, Manipur Rs 151 crore, Meghalaya Rs 194 crore, Mizoram Rs 132 crore, Nagaland Rs 157 crore, Odisha Rs 2,858 crore, Sikkim Rs 156 crore, Tripura Rs 297 crore, Uttar Pradesh Rs 9,703 crore, and Uttarakhand Rs 1,405 crore.

The facilities made available to the states, who have submitted their choice, include a special borrowing window, coordinated by the Ministry of Finance, to borrow the shortfall in revenue through issue of debt. The total shortfall in the revenue of the states on this account has been estimated at around Rs 1.1 lakh crore.

The government has also included permission to borrow the final instalment of 0.5 percent of GSDP out of the 2 percent additional borrowings permitted by the government in view of the COVID pandemic, waiving the reforms condition.
The government had provided additional borrowing limit of up to 2 percent of GSDP to states. The final instalment of 0.5 percent out of this 2 percent limit was linked to carrying out at least three out of four reforms stipulated by the Centre.

“However, in case of states who have exercised Option-1, to meet the shortfall arising out of GST implementation, the condition of carrying out the reforms to avail the final instalment of 0.5 percent of GSDP has been waived,” the government statement said.

The 20 states, who have exercised Option-1, are eligible to raise an amount of Rs 68,825 crore through open market borrowings. Action on the special borrowing window is being taken separately, the statement said.

On October 12, the GST Council could not reach a consensus on borrowing options in lieu of compensation cess shortfall and Finance Minister Nirmala Sitharaman had said that some states questioned whether the Council has any authority to disallow those states that have already opted for one of the borrowing options from going ahead with their borrowing plans.

Source: Money-Control.

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GST compensation cess to stay beyond June 2022 to help states

GST compensation cess to stay beyond June 2022 to help states

After joining hands with the states at the GST Council to extend the applicability of compensation cess on cars, coal and soft drinks beyond June 2022, the Centre on Monday closed the room for further negotiation, arguing that the modalities of borrowing funds can’t be finalised by the panel comprising Union and state finance ministers.

The latest move can further strain relations between the Centre and opposition-governed states. The change in stance came after finance minister Nirmala Sitharaman said at a press conference the Council agreed to meet again on October 12 to resolve the borrowing issue with the states. The issue has strained ties between the opposition states and the Centre as revenues have dried up due to the impact of lockdown. The latest development came after the finance ministry conceded some ground in helping states raise more funds to bridge the “revenue loss”.

While the government had assured to compensate states in case GST collections did not grow 14% annually, the compensation requirement has shot up to an estimated Rs 3 lakh crore this year due to Covid-19.

With a projected deficit of Rs 2.3 lakh crore, the Centre has come up with two options, involving market borrowings, to bridge the gap with repayment funded through the compensation cess. On Monday, as part of the first option, the Centre tweaked the formula in a way that the deficit due to GST implementation was pegged at Rs 1.1 lakh crore instead of Rs 97,000 crore estimated earlier.

The Centre has offered to help states access this money via a special RBI window to ensure competitive rates and also help them use the compensation cess to repay the interest and principal — an offer that has been accepted by 20 states. The other option is for states to borrow Rs 2.3 lakh crore directly from the market, which means at a higher cost.

Ten states and UTs including Kerala, West Bengal, Punjab, Chattisgarh, Delhi and Tamil Nadu have refused to accept the two options on the table and protested at Monday’s meeting. They want the Centre to borrow funds and allocate it to states.

Sitharaman, who heads the GST Council, suggested that states will need to make a distinction between Covid-related impact and those related to implementation issues as the law has not factored in the possibility a crisis like the Coronavirus pandemic. “Nobody will be denied compensation, arising out of implementing of GST and Covid impact. Borrowing has to be done. Decision is how much you want to borrow,” she told reporters after the marathon GST Council meeting, adding states will not have to bear the burden as the compensation cess will be used to clear the dues.

While she said further discussion on the issue will take place on October 12, Union government sources argued that the ball was not in the states’ court as borrowing was not a matter to be decided by the GST Council. “States have to give their preference to the expenditure department as it is an issue under Article 293 of the Constitution. The choice has to be exercised by states,” said a source, adding that the issue of voting in the GST Council meeting does not arise. The Council has jurisdiction to extend the levy of cess and it exercised its authority on Monday, an official explained.

Source: Timesof-India.

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GST Council meeting postponed to October 5

GST Council meeting postponed to October 5

The GST Council meeting slated for September 19 has been postponed to October 5, sources said on Friday.

The 42nd meeting of the Council has been postponed since Parliament would be in session, they added.

The Centre had last month decided that the 41st and  42nd meeting of the Council would be held on August 27 and September 19. However, then the dates for the monsoon session of Parliament was not decided.

The October 5 meeting assumes significance as the Centre and states are at loggerheads over the issue of funding Rs 2.35 lakh crore GST collection shortfall.

Of this, as per Centre’s calculation, about Rs 97,000 crore is on account of GST implementation and rest Rs 1.38 lakh crore is the impact of COVID-19 on states’ revenues.

The Centre late last month gave two options to the states to borrow either Rs 97,000 crore from a special window facilitated by the Reserve Bank of India (RBI) or Rs 2.35 lakh crore from market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.

Chief ministers of 6 non-BJP ruled states — West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu — have written to the Centre opposing the options which require states to borrow to meet the shortfall.

Sources said till September 8, as many as 7 states have conveyed to the Centre about their choice of the options.

While Gujarat, Bihar, Madhya Pradesh, Karnataka and Tripura opted for borrowing Rs 97,000 crore, Sikkim and Manipur opted for the second option to borrow Rs 2.35 lakh crore.

The Centre on its part argued that the revenue accruing from GST compensation cess goes to the states and hence the Centre cannot borrow on the security of a tax it does not own.

For April-July, the GST compensation due to states stands at Rs 1.50 lakh crore.

Source: Times-Of-India.


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GSTN issues Statistical Report on 3 years of GST implementation

GSTN issues Statistical Report on 3 years of GST implementation

The Goods and Service Tax Network (GSTN) releases a Statistical Report on completion of 3 years of GST Implementation.

The report highlights the key statistics regarding registration trend from April 2018 to June 2020; active taxpayers as on June 30, 2020; month-wise returns filed since July 2017; GSTR-1 return filing trend from July 2017 to May 2020; GSTR-3B filing compliance as on June 30, 2020; and Invoice Count as per Turnover Slab.

The report in relation to payment highlights from April 2018 to March 2019 and from April 2019 to March 2020; it further highlights the Contribution to GST Revenue from different Constitutions of Business.
The report in relation to refunds highlights the Data Transmission to Customs for Refund of IGST Paid on Export of Goods from June 2019 till June 2020; and Online Refund Status as on June 30, 2020.

The report in relation to E-way Bills highlights the E-way bill Statistics from April 1, 2019, to June 30, 2020; E-way bill generation from April 1, 2019, to June 30, 2020; modes of E-way Bill Generation; E-way bill Statistics during COVID-19 Pandemic; and upward Movement in E-way Bill Generation from 3rd week of April.

The report further highlighted the GSTN Outreach Initiatives which included Tax Officials and Stakeholders Training during 2019-20 and GSTNs YouTube Channel 2017-2020.

The GSTN introduced a GST Interactive Technical Assistant named Chatbot on 26th June 2020. GITA is loaded with pre-drafted responses to the queries asked by taxpayers on common topics, such as- Payment, E-way bill, Registration, Refunds, and Returns, etc. The Chatbot works on Artificial Intelligence (AI) based technology. This 24×7 facility is available on the GST portal for mobile users too.

The report further included the Social Media Statistics; Services like helpdesk; Number of Officers Using GST Back Office; Taxpayer Helpdesk; and Taxpayer Assistance.

Read Here: https://www.taxscan.in/preview/?previews=1VGxXEV1YmB2AVDADwMVuf6j3aHbgDHT7

Source: TaxScan.

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GST compensation to states pending for Dec-March FY20

GST compensation to states pending for Dec-March FY20

Finance Minister Nirmala Sitharaman on Sunday said GST compensation is due to all the states for the four-month period of December-March. “We are periodically talking about it. GST dues are very clearly explained in the GST Council. It is not for selective states… All states’ GST dues which we recognise for December, January, February, March have not been paid,” Sitharaman told reporters here.

Under GST law, states are guaranteed to be paid for any loss of revenue in the first five years of the GST implementation from July 1, 2017. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.

Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss. There were no differences between the Centre and states with regard to compensation payment in 2017-18, 2018-19 and in the first four months (April-July) of the previous fiscal (2019-20).

However, with revenue mop-up from compensation cess falling, the Centre held back fund transfer to states beginning August. Following this, states raised the issue with the Centre and in December 2019, Rs 35,298 crore was released as compensation for August-September, while Rs 34,053 crore was released in two instalments in February and April as compensation for October-November.

The Centre has, so far, released over Rs 2.45 lakh crore as GST compensation to states since the implementation of the new indirect tax regime on July 1, 2017. During July 2017-March 2018, Rs 48,785 crore was released, while between April 2018-March 2019, Rs 81,141 crore was paid to states.

For April-May and June-July last year, Rs 17,789 crore and Rs 27,956 crore were released. Further, Rs 35,298 crore was paid to states as compensation for August-September and Rs 34,053 crore for October-November 2019.

Source: Times-now-news

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