The panel also relaxed levy of penalty for non-filing of GSTR-1 from July 2017.

Taxmen were told that both the GST and Rs 13.35 lakh crore target for direct taxes for 2019-20 will have to be achieved.

Collections under the GST, which was introduced in July 2017, has remained mostly below the target.

The delays to pass on the money are due to a slip in collections and the states have nothing to worry, said FM Nirmala Sitharaman.

The meeting of all-powerful GST Council is going to be held against the backdrop of lower-than-expected GST collection.

The government, however, said the revenues shot up sharply in November due to festival demand in October.

According to official sources, the number reflects pick up in consumption and improvement in compliance as well.

The Centre has also reduced the credit limit of the state by almost Rs 6000 crore.

The earlier deadline for filing of GSTR-9 and GSTR-9C for 2017-18 was November 30, 2019, while that for 2018-19 was December 31, 2019.

Last time services activity contracted for two consecutive months was in August 2017 following the GST implementation.