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GST compensation period: States likely to push for five-year extension

Set to seek higher borrowing limits as revenues dry up

(Illustration: Ajay Mohanty)
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States may discourage the Centre from reducing the outlay on Centrally Sponsored Schemes (CSS) and revenue deficit grants, even if it warrants borrowing from the markets. (Illustration: Ajay Mohanty)

Dilasha Seth New Delhi
States are likely to request the Centre for an extension in the goods and services tax (GST) compensation period, by up to five years beyond FY22. This is driven by the severe shortfall in revenue owing to disruption in economic activity.

The GST Council is expected to meet this month to discuss alternative compensation mechanisms, amid inadequate cess collections. States may write to the 15th Finance Commission, seeking the extension. They are likely to point out the challenge in meeting routine expenditure after 2022, in the absence of any compensation.

States may discourage the Centre from reducing the outlay on Centrally Sponsored

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