GST Revenue Shortfall: All States Choose Option-1

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Business

oi-Olga Robert

By Staff

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Published: Saturday, December 5, 2020, 13:54 [IST]

All the 28 states and three Union Territories (UT) with legislature have decided to go for Option-1 to meet the revenue shortfall arising out of the Goods and Services Tax (GST) implementation, an official statement from the Ministry of Finance said.

Jharkhand, the only remaining state, has now communicated its acceptance of Option-1, it said.

GST Revenue Shortfall: All States Choose Option-1

The Central government has set up a special borrowing window for the states and the UTs who choose Option-1 to borrow the amount of shortfall arising out of GST implementation.

“The window has been operationalised since 23rd October 2020 and the Government of India has already borrowed an amount of Rs 30,000 crores on behalf of the States in five installments and passed it on to the States and Union Territories, who chose Option-1,” the release said.

Now, the Jharkhand government will also receive funds raised through this window starting from the next round of borrowing.

The next installment of Rs 6,000 crore will be released to the states/UTs on 7 December.

According to the ministry, under the terms of Option-1, the states are also entitled to get unconditional permission to borrow the final instalment of 0.50% of Gross State Domestic Product (GSDP) out of the 2% additional borrowings permitted by the Government of India, under Atma Nirbhar Abhiyaan. This is over and above the Special Window of Rs1.1 lakh crore.

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