The GST Council is scheduled to meet later this month on June 12 and is likely to discuss the impact of the COVID-19 pandemic on tax revenues. The coronavirus outbreak has hit the economy hard and the government has announced several relief measures for different sectors. The 40th meeting of the GST Council will be headed by Finance Minister Nirmala Sitharaman. It will comprise of her state counterparts and will be held via video conferencing.

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The meeting would discuss the impact of the pandemic on revenues of the Centre and states and ways to bridge the revenue gap. The Council will also discuss ways to garner funds to compensate states for the revenue loss due to Goods and Services Tax (GST) implementation. The Council would also discuss waiver of late fees for non-filing of GST returns for the period August 2017 to January 2020.

Faced with dismal collection and extended deadline for filing returns, the government has refrained from releasing the monthly GST revenue collection figures for the months of April and May. 

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The previous GST Council meet was held on March 14, 2020. After the meet, finance minister had said that the Centre will look into the legality of GST Council borrowing from market to meet the compensation requirements. With states raising the issue of shortfall in compensation kitty, there were discussions on resorting to market borrowing to meet the revenue guarantee to states.

The states were also guaranteed to be paid for any loss of revenue in the first five years of the GST implementation from July 1, 2017. The benefit was extended under the GST law. The shortfall is calculated assuming a 14 per cent annual growth in GST collections by states over the base year of 2015-16.

The GST structure was implemented in 2017. Under it, 5, 12, 18 and 28 per cent tax slabs are imposed. On top of the highest tax slab, a cess is levied on luxury, sin and demerit goods and the proceeds from the same are used to compensate states for any revenue loss.