The economy has been hit hard by the COVID-19 pandemic, which is an ‘Act of God’, and the economy will see a contraction in this fiscal year, said Finance Minister Nirmala Sitharaman.
Finance Minister Nirmala Sitharaman, after the 41st GST Council meeting in New Delhi, Thursday, said the coronavirus pandemic was “an act of God” and an unforeseen factor that affected GST (Goods and Services Tax) collections.
“This year we are facing an extraordinary situation. We are facing an act of God where we may even see a contraction,” she said.
The pandemic has affected GST revenues this year from a shortfall of Rs 70,0000 crore which has widened to Rs 2.35 lakh crore this year, which may result in a contraction in India’s growth for the current fiscal.
“This year we are facing an extraordinary situation… we are facing an act of God which might even result in a contraction of the economy, to what percent I am not getting into that,” Sitharaman said in the meeting.
The FM also said, “The Centre will pay the states the compensation which strictly arises out of GST implementation”.
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Also, no proposal has been made to raise taxes to compensate for the shortfall of the economy due to COVID-19. The deficit can be made good by states borrowing using a special window and the loan can be repaid after five years from the collection of GST.