Context:

Even after continuous meetings, the Goods and Services Tax (GST) Council failed to reach a consensus on borrowing options in lieu of the compensation cess shortfall.

Compensation Issue

• In October, payments to states were delayed as the collection was lower than expected.
• Under GST (Compensation To States) Act, 2017 states were guaranteed to receive payment for any loss of revenue in the first five years of the GST implementation, from July 1, 2017.
  • States have been promised compensation for any revenue shortfall till 2022, in case they go below the 14 percent annual growth since the GST rollout in 2017.

Goods & Services Tax Council

• Goods & Services Tax Council is a constitutional body
• It makes recommendations to the Union and State Government on issues related to Goods and Service Tax.
• As per Article 279A of the amended Constitution, the GST Council which is a joint forum of the Centre and the States shall consist of the following members: –
• Chairperson: The Union Finance. Minister- Chairperson
• Member: the Union Minister of State in charge of Revenue or Finance-
• Member: Members: the Minister in charge of Finance or Taxation or any other
  • Minister nominated by each State Government.
• Every decision of the GST Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting.