anurag thakur: GST Council can ask Centre to let states borrow to compensate shortfall: Attorney General


New Delhi: The Goods and Services Tax (GST) Council is empowered to ask the Central government to permit the states to borrow for meeting GST compensation shortfall, the attorney general has said in his opinion to the government on the matter.

In a written reply to a query in Rajya Sabha, minister of state for finance Anurag Thakur said that the AG had, however, left it to the Centre to take the final call on the borrowing by states, citing laws laid down in the Constitution.

“The GST Council can, in the exercise of its duties under Article 279A (4)(h) of the Constitution, recommend to the central government to permit the states to borrow money, as a measure for meeting the compensation gap,” Thakur said. “It would, however, be for the central government to take final decision in the matter, in exercise of its authority under Article 293(3) of the Constitution,” he added.


As per the reply, the AG has also said that the GST Council can recommend continuance of cess beyond the transition period of five years – that is beyond 2022 – to raise funds for paying compensation in the event of a shortfall during the transition period.

“The step to be taken on account of any ‘extra ordinary circumstances causing a steep fall in GST revenues and shortfall in the fund’ move can be made under Section 8(1) of the Act, but would “require a decision by a three-fourth majority of the weighted votes,” the AG had added in his opinion

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