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LATEST NEWS UPDATES | Bengal, Kerala agree to Centre's GST borrowing formula

Bengal, Kerala agree to Centre's GST borrowing formula

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published Published on Nov 26, 2020   modified Modified on Nov 26, 2020

-The Telegraph

Three states — Punjab, Jharkhand and Chhattisgarh — have not accepted the proposals yet

Bengal and Kerala have dropped their opposition to the Centre’s borrowing option to bridge the gap in the Goods and Services Tax revenue receipts.

The two states have opted for the limited borrowing option under which the Centre will borrow funds and pass them on to the states but the debt will be recognised in the balance sheets of the states.

The debt will be serviced using the proceeds from the GST compensation cess collected from luxury and sin goods such as tobacco, cars and aerated drinks.

The number of states that have opted for the limited borrowing formula is now 25. Three states — Punjab, Jharkhand and Chhattisgarh — have not accepted the proposals yet, saying the Centre should borrow the entire Rs 1.83 lakh crore of shortfall.

Union territories Delhi, Jammu and Kashmir and Puducherry have also decided in favour of the special window facilitated by the Centre. The finance ministry statement said the two state governments have communicated their acceptance of the scheme and will get Rs 10,197 crore through the special borrowing window.

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The Telegraph, 26 November, 2020, https://www.telegraphindia.com/business/bengal-kerala-agree-to-gst-borrowing-formula/cid/1798619


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