New Delhi, May 28 (IANS): As the pandemic situation worsens with the second wave of Covid-19, the GST compensation cess sharing formula adopted for the last financial year amid lower revenue collection will continue in the current fiscal, the Centre said on Friday.

Addressing the media after the GST Council's meet, Finance Minister Nirmala Sitharaman said that the Centre will have to borrow Rs 1.58 lakh crore and pass it on to states.

She said that a special session will be conducted to discuss modalities of the GST compensation cess such as collection, distribution, and time limit.

"As we are in the last of the 5 years of 14 per cent compensation protected revenue arrangement, I have assured the members, we'll hold a special session of the GST Council, exclusively on single-point agenda of how compensation cess is to be collected," she said.

On October 5 last year, the GST Council had decided to extend the levy of compensation cess beyond the transition period of five years for such period as may be required to meet the revenue gap.

As part of GST compensation settlement formula, the Centre borrowed around Rs 1,10,000 crore in FY21 for back-to-back transfers to states towards meeting their GST compensation.

The borrowing and its interest is to be settled from realisations on account of GST compensation cess. The GST Council allowed levy of cess beyond the five year transition period ending June 2022 to clear all unmet compensation dues of states.