The Centre also made a distinction between revenue lost due to implementation of the GST and the economic slowdown arising out of the COVID-19 crisis. The government said its legal obligation was only to compensate states for losses arising out of the GST rollout. The deficit can be made good by states borrowing using a special window, she said, adding this loan can be repaid after five years from the collection of GST cess. States can borrow about Rs 97,000 crore -- the deficit arising out of GST implementation -- or the entire Rs 2.35 lakh crore, she said. If states agree to either of the options, it would effectively mean that cess would continue beyond five years of GST rollout. The minister said the GST Council decided that the borrowing arrangement would be for the current fiscal and a review would be done at the beginning of the next financial year.

 A detailed note on the two options would be shared with the states and they would give their views on it in seven working days.

 While the non-NDA ruled states such as Kerala, Punjab and West Bengal had voiced strong opinions about the Centre’s obligation to compensate states, Sitharaman said there was no attempt to politicise the GST Council meeting on Thursday.

CORONAVIRUS WILL LEAD TO ECONOMY CONTRACTION: FM