THIRUVANANTHAPURAM: The Kerala government on Thursday termed as "unacceptable" the two options placed before the GST Council by the Centre for borrowing by states to meet the shortfall in tax revenues.
Opposing the options for the Goods and Services Tax (GST)compensation proposed by the Union Finance Minister Nirmala Sitharaman, Kerala Finance Minister T M Thomas Isaac said in both options the states will have to sacrifice a part of the compensation.
He made it clear that full compensation was a constitutional right of the states.
"Full compensation is constitutional right of states. Unacceptable.#GSTCouncilMeet," Isaac said in a tweet on Thursday night.
According to Isaac, the Centre should empower the GST Council to borrow to meet the compensation requirement, if necessary through an ordinance. Such borrowing can be on the strength of future receipts of an extended levy of compensation cess beyond five years
Earlier in the day, the Centre placed before the GST Council two options for borrowing by states to meet the shortfall in GST revenues, pegged at Rs 2.35 lakh crore in the current fiscal.
Briefing reporters after the 41st meeting of the GST Council, Sitharaman said in New Delhi that the economy is facing an extraordinary 'Act of God' situation, which may result in economic contraction.
As per the Centre's calculation, the compensationrequirement by the states in the current fiscal would be Rs three lakh crore, of which Rs 65,000 crore is expected to be met from the cess levied in the GST regime. Hence, the total shortfall is estimated at Rs 2.35 lakh crore.