Finance Minister Nirmala Sitharaman chaired the 41st meeting of the GST council on Thursday via video conferencing. The meeting is coming amid the outbreak of the novel coronavirus pandemic in India and lockdown measures causing major revenue shortfall to centre and state coffers. The GST Council is expected to take up these issues in today's meeting.

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Here are the live updates from the 41st GST Council meeting today:

Puducherry CM V Narayanasamy of the Congress, besides Punjab and Chhattisgarh ministers Manpreet Badal and TS Singh Deo say they do not agree with the FM's options, and say the central government is going back on its word to make good losses arising from GST.

FM: In both options, we will facilitate states for borrowing from the RBI. Both options are for this year only. The rate of interest will be the same for all states.

FM: Since revenue collections won't be predictable for next year so we decided that it will be prudent for the council to see how the council would like to handle the situation next year.

FM Sitharaman: We explained to states why it will be better for states to borrow rather than the centre. The cess kitty will bear the burden of repayment of interest on the borrowing.

Two-wheelers may merit to go to the GST council for consideration, said Finance Minister Nirmala Sitharaman on being asked about GST cut for two-wheelers during the media briefing of 41st GST Council meet.

FM Sitharaman: In both the options there shall be no burden on states as we are trying RBI to facilitate the loan. The repayment mechanism and cycle will be decided only after the option is selected by the states. It could be either extension of year, could be higher rates of cess on sin goods. But it is not the right time to talk about the rates.

FM Sitharaman: I offered states 0.5 relaxations in FRBM if they decide to borrow on their own, without the conditions of completing the tasks under Atmanirbhar Bharat program. (IMP: The Centre willing to offer 0.5 percent further relaxation in FRBM for state borrowings—3.5 percent can become 4 percent; it is an incentive to states to borrow from the market and an unconditional relaxation for enhanced state borrowing)

Finance Minister Nirmala Sitharaman: We are facing extraordinary situation because of an act of God; some states may say I don't want to go to the market to borrow since they have planned expenditure based on promised compensation.

FM Sitharaman: We are trying to facilitate the borrowing for the states. We will see how borrowing can be done in the name of states. (CNBC-TV18 News confirmed)

#GST | Finance Minister @nsitharaman says we are facing extraordinary situation because of an act of god; some states may say I don't want to go to market to borrow since they have planned expenditure based on promised compensation@nsitharamanoffc pic.twitter.com/f1xXHxfyrM

— CNBC-TV18 (@CNBCTV18Live) August 27, 2020

FM Sitharaman: We may have to do another brief GST Council meet to discuss the view of the states. Already two bi-monthly instalments are delayed so an early resolution will help in clearing the dues. Early in April 2021, the GST Council should take a fresh call to look how to continue paying for the fifth year.

FM Sitharaman: Briefing the media, the FM says that two options were discussed in detail spanning almost 5 hours of discussions. In both options, we kept on saying that we will talk to the RBI to align G-Sec years and rates so that each state does not have to run after the RBI. The states have asked us to put both the options in a detailed note and give them 7 working days to respond.

Ajay Bhushan Pandey, Finance Secretary: The second option is how RBI can lend to states. These options will be sent to states for a view within 7 days. This option will be for just this fiscal. As we expect revenue scenario will improve and another view can be taken next fiscal. The revenue gap is expected to be Rs 2.35 lakh crore.

#GSTCouncilMeet | Revenue shortfall for states not only because of GST but because of impact from COVID, says Ajay Bhushan Pandey, Finance Secretary pic.twitter.com/dJ5NlwWSLD

— CNBC-TV18 (@CNBCTV18Live) August 27, 2020

Ajay Bhushan Pandey, Finance Secretary: The first option is that the compensation gap need for this fiscal is of around Rs 3 lakh crore and the kitty will fall short by around Rs 97, 000 crore. The centre can see if RBI can lend to states to be re-paid from the compensation cess period.

Ajay Bhushan Pandey, Finance Secretary: AG's opinion is that the compensation has to be paid for a transition period of 5 years but the compensation gap has to be met from Compensation cess kitty. AG clearly said that the gap can not be made from the Consolidated Fund of India. AG also of a view that compensation cess period of 5 years can be increased and certain options were discussed.

Ajay Bhushan Pandey, Finance Secretary: We went to Attorney General for a legal view as decided by the Council in March meeting.

Briefing the media, Finance Secretary Ajay Bhushan Pandey says, the GST Council meeting was on the issue of compensation to states. In the current year due to the pandemic, resulting in economic slowdown has severely impacted the GST collections.

The GST Council meeting concludes. FM Sitharaman will brief the media shortly.

CNBC-TV18 Exclusive: According to sources, the Centre is going to formulate the options for market borrowings to be shared with states. The states will have to reply on the nature of borrowing within 7 days to the centre.

Council likely to settle for Market borrowing route to pay compensation to states; Centre to formulate the options for market borrowings to be shared with states: Sources #GSTCouncilMeet pic.twitter.com/gA9RePd6Gn

— CNBC-TV18 (@CNBCTV18Live) August 27, 2020

Sources to CNBCTV18: The Council likely to settle for market borrowing route to pay the compensation to states. The Centre likely to borrow funds in the name of states and the repayment to be done by increasing the number of years for which compensation cess will continue to exist. It is to be noted that currently the compensation cess is set to expire by July 2022 i.e. 5 years from the rollout of the GST. The Centre needs around Rs 2.5 lakh crore to compensate states. The states are to send in their comments on the proposal in 7 days.

Union Finance Minister Nirmala Sitharaman is making the concluding remarks. The FM said there is no question of reneging on the payment of compensation.

Union Finance Minister Nirmala Sitharaman is making the concluding remarks. The FM said there is no question of reneging on the payment of compensation.

Sources to CNBC-TV18: States contesting the Centre's view of distinguishing between the implementation of the GST and the COVID-19 as a reason for the shortfall. States adamant that they should get the full amount of compensation.

Centre continues with its stand on Centre not obligated towards loss due to COVID-19, sources told CNBC-TV18.

Meanwhile, the Congress Party has called for a Special Press Briefing by V. Narayanasamy, TS Singh Deo and Manpreet Badal today at 5 PM via video conference.

Chhattisgarh GST representative TS Singhdeo informs Council: The Centre being elder in the family should shoulder the burden of taking the loan to be repaid through cess kitty by extending the time from June 2022. The earlier proposal of extending the compensation period beyond July 2022, is still pending and needs an early resolution.

Under GST, the term 'Inverted Tax Structure' refers to a situation where the rate of tax on inward supplies (purchases) is more than the rate of tax on outward supplies (sales). In simple terms, the GST rate paid on purchases is more than the GST rate payable on sales. Read more

Tamil Nadu, Chhattisgarh, Puducherry, Haryana, Telangana, Jharkhand, Maharashtra, Punjab, Andhra want the Centre to borrow. At least 10 states say the Centre should borrow to meet compensation shortfall. The borrowing can be adjusted against the continuation of cess even after 5 years.

Goa asks council to consider other revenue-raising measures instead of borrowing. The state suggested that the GST Council can increase the cess on the tobacco products to raise the revenue. It also asked to pay small states immediately as states are in need of funds, while larger states can wait for some time.

Sources to CNBCTV18: Bihar deputy CM Sushil Modi suggests states borrow to meet compensation shortfall. No consensus on the issue of states resorting to borrowing to meet the shortfall. Some states insist on the Centre borrowing to make good the shortfall.

ALSO READ | The compensation challenge in the GST regime

Delhi Deputy CM Manish Sisodia to GST Council: When the cess collection was more than needed, the Centre shifted Rs 47,000 crore to the Consolidated Fund of India. But now when funds are falling short, the Centre is asking states to borrow is not a good sign.

Sources to CNBCTV18: Punjab FM quotes Ernest Hemingway, “The first panacea for a mismanaged nation is inflation of the currency, the second is war. Both bring temporary prosperity but eventually both bring permanent ruin. Both are a refuge of political and economic opportunists.”

Sources to CNBC-TV18: Delhi, Punjab, Kerala others oppose the proposal by the Centre and Bihar to ask states to borrow.

Sources to CNBCTV18: Centre advocating borrowing by states as a possible solution; States opposing the centre’s proposal.

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Punjab FM Manpreet Badal questions the Centre for not circulating the AG’s opinion in advance with the GST Council members. “What was the need to keep it (AG’s Opinion) under wraps till the last minute?”

Sources to CNBCTV18: GST Council begins the discussion on compensation funds. The Centre presents Attorney General’s opinion to the GST Council saying AG’S opinion is that the centre not obligated to compensate for the COVID-19 related revenue loss.

The 41st GST Council meeting begins with FM Nirmala Sitharaman chairing the meet via video conferencing in New Delhi today. MoS Finance Anurag Thakur, as well as finance ministers of states and union territories and senior government officials, have also joined.

Finance Minister Smt. @nsitharaman chairing the 41st GST Council meeting via video conferencing in New Delhi today. MOS Shri. @ianuragthakur, Finance Ministers of States & UTs and Senior officers from Union Government & States are also present in the meeting. pic.twitter.com/wt4ZBaMeW8

— Ministry of Finance (@FinMinIndia) August 27, 2020

Dealing with Goods and Services Tax (GST) compensation shortfall is not alone centre’s responsibility, said sources. "It’s a force majeure situation. Centre and states must collectively resolve it. GST Council must put its collective decision making mechanism at work and resolve this critical issue," they said.