GST Council had approved a bill for State compensation for revenue loss arising out of GST in the country.
The Inception
GST Council had approved a bill for State compensation for revenue loss arising out of GST in the country. A bill called Goods and Services (State compensation for loss of revenue) bill shall provide for compensation to the states for loss of revenue arising on the account of implementation of the Goods and Services Tax for a period of 5 Year as per section 18 of the Constitution Act.
Key Points of Compensation Bill
- Provides for revenue loss compensation to the state for 5 years.
- Nominal growth rate projected revenue has been decided @ 14%
- Base year to be financial year.
- Taxes are subsumed to be considered.
- Local Bodies taxes (other than state taxes) excluded.
- Cess for 5 years GST compensation Cess to be levied.
- Input tax credit of cess will be allowed
Procedure of State Compensation for Revenue Loss under GST
Parliament may, by law, provide for state compensation for revenue loss arising out of the implementation of the GST, based on the recommendations of the GST Council. Such compensation could be for a maximum period of 5 Years. States shall receive provisional compensation from Centre for loss of revenue from implementation of GST in each quarter but the final annual number would be decided only after an audit carried out by CAG. The compensation would be met through the levy of a cess called ‘GST Compensation Cess’ on luxury items and sin goods like tobacco, for the first 5 years. Any excess amount after the end of 5-year tenure in the ‘GST Compensation Fund’ so created would be divided between Centre and states.
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Esta historia es de la edición September 2018 de Mad About Money.
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