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Central government will take loans to pay the outstanding GST of states, is the dispute over?

The dispute over the GST payment that has been going on for the last few months between the Center and the state government seems to be over. The central government has decided that instead of states, it will take a loan from the market or the Reserve Bank of India to pay GST tax. For this, the central government has said that it will borrow about 101000 crores rupees from the market or the Reserve Bank to pay the GST of the states. However, it is not yet decided where the loan will be taken from.

How will the debt taken by the central government to pay GST be repaid? The situation is not clear on this yet. But experts believe that this is a correct decision taken by the Central Government but only late.

What is GST tax dispute between central government and state governments

It has been almost 4 years since GST came into force in India. But still GST in India is not able to collect tax according to its set targets.

Finance Minister Nirmala Sitharaman gave the information via Twitter that the central government will borrow one lakh one thousand crore rupees as a loan to pay the GST of the state’s share. Finance Minister Nirmala Sitharaman says that although still The option is open that some states may borrow from the Reserve Bank of India in the form of loans.

The Central Government has persuaded the states to implement GST on the matter that as long as the loss of the states will be due to GST. 14% additional amount will be added to the states. But due to Corona virus, the GST collection in the country has come down to Rs 85000 crore. Which used to be around 100000 crores till now. Due to this, the share of GST collection of the states increased over that of the central government and now reached around 235000 crores rupees.

The central government says that we are asking states to borrow money from the Reserve Bank of India. The BJP-ruled states were forced to borrow this money from the Reserve Bank of India. But states of Congress and opposition parties were not ready to borrow this money from Reserve Bank of India. State governments said that we are already stuck in debt. And if we take more loan then we will face financial difficulties in the coming days. Therefore, this loan should not be taken by the state government but the central government. State Governments say that at the time of formation of GST, we were told that we will be given 14% of our losses by adding. In view of this, the Central Government has decided to raise capital from the market, pulling back its steps.

To pay the GST arrears of states, why the central government agreed to take loans

Now the question arises here that why the central government agreed to borrow to repay the dues of the states? Experts are of the opinion that if this matter goes to the Supreme Court, then the central government’s favor would be weak there. In such a situation, the Central Government was afraid that if the case is lost in the Supreme Court, the entire amount may have to be paid simultaneously.

Kerala Finance Minister Isaac Thomas said that we are going to the Supreme Court. And 9 states will join the Supreme Court with us. Earlier on October 13, the central government had asked the states to take loans, on October 15, the central government withdrew its steps due to the case going to the Supreme Court. And 101000 crore rupees from the market agreed to take a loan.

The central government says that if it borrows from the market to pay GST of the states’ share, then its current fiscal deficit will increase significantly.

That is why we are constantly saying that the state governments should take loans from the market to compensate for GST. However, experts say that the central government has done the right thing by taking the decision of taking loans. The central government will be able to take loans easily and still have 5 to 6 months left in this financial year. In such a situation, if there is improvement in GST collection in the coming days, then the problems of the central government can be overcome to some extent.

Former finance minister P Chidambaram has also welcomed this decision of the central government to take loans. He said that the Central Government has done right by taking the decision of taking loans from the market. But it now needs transparency. The central government should tell how much money will be spent. And how much money will be paid to the states now? After this, how much GST arrears will be kept on yourself? Which the central government will give to the states in future.

Has GST tax dispute between central government and states ended?

The Central Government has at present agreed to take a loan of 101000 crores rupees from the market to pay the GST of the states share. But is this GST tax dispute now resolved between the Center and the states? Experts believe that this dispute is not going to stop. The central government has taken a loan of only ₹ 101000. While the states owe more than ₹ 235000 on it. The central government hopes that the GST collection will increase in the coming days. In such a situation, she can work even by taking less debt.

At the same time, the state government says that in the coming days, there is little hope that there will be any improvement in the GST collection in view of Corona virus disease. The state government wants the central government to guarantee the states that they will pay the GST of the states’ share on time for the coming years. The state government wants to do so at least till 2023.

Experts are saying that in the coming days, once again the state and central government can come face to face with the GST tax dispute. If there is no improvement in GST tax collection in the coming days, then how much central government will be able to pay GST to the states? It will be interesting to see. And if the central government is unable to give the entire share to the states, then in the coming days, this state government can once again talk of going to the Supreme Court. Then the difficulties of the central government may increase even more.

Why is the state government refusing to take loans from the Reserve Bank of India

The state government says that their financial condition is already very bad. In such a situation, if they take more loans from the Reserve Bank of India, their financial condition will get worse. In such a situation, we cannot borrow from the Reserve Bank of India as a loan. The central government will have to pay our GST dues.

The state government says that if the central government does not pay our GST in full in the coming days, we will not have any money left to pay the employees. Some state governments say that it is becoming increasingly difficult to keep up with our daily expenses. In such a situation, the central government should pay our full GST.

GST collection is dependent on coronavirus epidemic

If the GST collection does not increase in the coming days, then the problems of the central government are believed to increase. The same GST collection is also dependent on the coronavirus epidemic. If the coronaviruses do not come under control, then experts are expecting a lower GST collection in the coming days. Nothing can be said about the corona virus. However, the matter of relief is that the corona virus cases in India are continuously decreasing. Now it will be interesting to see how long the GST tax dispute will continue between the state and the Center.

Expert are also saying that in the coming days, the central government will not have the capacity to take more loan from the market. In such a situation, it is considered necessary to increase the GST collection in India.

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