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No consensus over compensation, GST Council to meet again on Oct 12

An eight-hour meeting of the GST Council on Monday failed to break the impasse over how to make up for the GST shortfall to states, leading to another meeting a week later, Union Finance Minister Nirmala Sitharaman announced at a media briefing.

However, the GST Council approved several decisions such as extending the period of GST compensation cess to five years, reducing the number of GST return forms for small businesses by one-third and wiring tonight to states the Rs 20,000 crore collected this year in GST compensation.

The GST Council also approved the transfer of Rs 24,000 crore to states that had received less IGST than they were entitled to.

States that have been paid more will not be immediately asked to refund the money due to the pandemic situation, assured Sitharaman.

But the GST Council decided not to levy differential GST on alcoholic and non-alcoholic sanitizers.

“Nobody is being denied compensation arising out of the implementation of GST and also compensation arising out of Covid impact. The borrowing has to be done,” she said while rebutting charges by 10 Opposition-ruled states that the Centre was shortchanging them of their legitimate GST dues.

“The question was that 20 states have chosen an option but some have not chosen any. The argument of those who had not chosen any option was that the Centre should borrow. At the end of day, it was felt the GST Council can’t decide on the basis of the opinion of 20 states, we need to talk further,’’ she said while explaining the long-drawn-out meeting and indicating that the Centre wanted consensus instead of a division to prevail.

“I was gently reminded that I can’t take anybody for granted. I don’t take anybody for granted. Since there was a suggestion from a senior member (Bihar Deputy CM Sushil Modi) suggesting that some days be given, I have given a clear eight days,’’ Sitharaman added.

She also announced that from January 1, GST payers with annual turnover of less than Rs 5 crore need not file GSTR 3B and GSTR 1 every month. They nevertheless will have to submit “a very simple challan” every month.