Draft GST Compensation Law
GST
Dated:- 26-11-2016
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Document 1
GOODS AND SERVICES TAX (COMPENSATION TO THE
STATES FOR LOSS OF REVENUE) BILL, 2016
(No. of 2016)
[_th
2016]
A Bill to provide for compensation to the States for loss of revenue arising on account of
implementation of the goods and services tax for a period of five years as per Section 18 of The
Constitution (One Hundred and First Amendment) Act, 2016.
BE it enacted by Parliament in the Sixty-seventh Year of the Republic of India as follows:-
1.
SHORT TILE AND COMMENCEMENT
(1)
(2)
(3)
This Act may be called the Goods and Services Tax (Compensation to the States for Loss
of Revenue) Act, 2016.
It extends to the whole of India.
It shall come into force on such date as the Central Government may, by notification in
the Official Gazette, appoint in this behalf.
2.
DEFINITIONS
(1)
“base year” shall have the meaning assigned to it in section 4;
(2)
“base year rev
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he rate of growth projected for the transition period as
per section 3;
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(11) “projected revenue” shall have the meaning assigned to it in section 6;
(12)
“State” shall include Union Territories with Legislature;
(13)
“taxable person” shall have the meaning as assigned to it in the Central Goods and
Services Tax Act, 2016;
(14)
“taxable supply” means a supply of goods and/or services which is chargeable to the
Goods and Services Tax Compensation Cess under this Act;
(15)
“transition date” shall mean, in respect of any State, the date on which the Goods and
Services Tax Act of the concerned state comes into force;
(16) “transition period” means a period of five years from the transition date;
(17) words and expressions used but not defined in this Act and defined in the Central Goods
and Services Tax Act, 2016 (… of 2016), shall have the meanings respectively assigned to them in
that Act, in the context of GST Compensation Cess levied on taxable supplies of go
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ear,
on account of the taxes levied by the respective State or Centre, net of refunds, with respect to
the following taxes imposed by the respective State or Centre, which are subsumed into goods
and services tax:
(a) Value Added Tax (VAT), sales tax, purchase tax, tax collected on works contract, or any
other tax levied by the concerned State under the erstwhile Entry 54 of List-II (State
List) of the Seventh Schedule to the Constitution, prior to bringing into effect the
provisions of the Constitution (One Hundred and First Amendment) Act, 2016;
(b) Central Sales Tax (CST) levied by the Central Sales Tax Act, 1956;
(c) Entry tax, octroi, local body tax or any other tax levied by the concerned State under
the erstwhile Entry 52 of List-II (State List) of the Seventh Schedule to the Constitution,
prior to bringing into effect the provisions of the Constitution (One Hundred and First
Amendment) Act, 2016;
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(d) Taxes on luxuries, including taxes on entertainments, amusemen
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arlier laws' as per section 2(39) of the State Goods and Services
Act of the concerned State.
(2) The Acts of the Central and State Governments under which the specific taxes are being
subsumed into the goods and services tax shall be as notified.
(3) The revenue collected during the base year in a State, net of refunds, on account of
following taxes, shall not be included in the calculation of the base year revenue for that State:
(4)
(a) Any taxes levied under any Act made under the erstwhile Entry 54 of List-II (State List)
of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions
of the Constitution (One Hundred and First Amendment) Act, 2016, on the sale or
purchase of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption;
(b) Any taxes levied under the Central Sales Tax Act, 1956 (74 of 1956) on the sale or
purchase of petroleum crude,
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ecific entities
under the laws specified under sub-section (2) to promote industrial investment in the State
would be included in the total base year revenue of the State, subject to the conditions as may be
prescribed.
(6)
The base year revenue shall be calculated as per sub-sections (1), (2), (3), (4) and (5) on
the basis of the figures of revenue collected net of refunds given in that year, as audited by the
Comptroller and Auditor General of India.
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(7)
In respect of any State, if any part of revenues mentioned in sub-sections (1), (2) and (3)
are not credited in the Consolidated Fund of the respective State, the same shall be included in
the total base year revenue of the State, subject to the conditions as may be prescribed.
6.
PROJECTED REVENUE FOR ANY YEAR
The projected revenue for any year in a State shall be calculated by applying the
projected growth rate over the base year revenue of that State.
7.
(1)
Illustration: If the base year revenue for 2015-16 f
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llows:
(a) The projected revenue for any financial year during the transition period, that could
have accrued to a State in the absence of GST, shall be calculated as per section 6.
(b) The actual revenue collected by a State in any financial year during the transition
period would be the actual revenue from State Goods and Services Tax collected by the
State, net of refunds given by the State under Chapter XI of the SGST Act, and the
Integrated Goods and Services Tax apportioned to that State, as certified by the
Comptroller and Auditor General of India.
(c) Total GST compensation payable in any financial year shall be the difference between
the projected revenue for any financial year and the actual revenue collected by a State
as defined in sub-section (b).
(3) The loss of revenue at the end of any quarter in any year for a State during the transition
period shall be calculated at the end of every quarter as follows:
(a) The projected revenue that could have been earned
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er in any financial year shall be the difference between the projected revenue for
till the end of the relevant period as per sub-section (3) (a) and the actual revenue
collected by a State in the said period as defined in sub-section (3)(b), reduced by the
provisional GST compensation paid to a State till the end of the previous quarter in the
said financial year during the transition period.
In case of any difference between the final GST compensation amount payable to a State
calculated as per provisions of sub-section (2) upon receipt of the audited revenue figures from
the CAG, and the total provisional GST compensation amount released to a State in the said
financial year as per sub-section (3), the same shall be adjusted against release of GST
compensation to the State in the subsequent financial year.
(5) Where no compensation is due to be released in any financial year, and in case any
excess amount has been released to a State in the previous year, this amount shal
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n 7(3) of the CGST Act, which may be prescribed on
the recommendations of the Council, for the purposes of providing compensation to the States
for loss of revenue arising on account of implementation of the goods and services tax for a
period of five years, w.e.f. the date from which the CGST Act is brought into force.
Provided that no such cess shall be leviable under this section on supplies made by a
taxable person permitted to opt for composition levy under section 8 of the CGST Act, 2016.
(1)
9.
RETURNS, PAYMents and Refunds
(1) Every taxable person registered under CGST Act, 2016, making a taxable supply of goods
and/or services, shall furnish such returns in such formats, as may be prescribed, along with the
returns to be filed under the Central Goods and Services Tax Act, 2016, shall pay the amount
payable under the Act in the manner as may be prescribed and apply for refunds of cess paid and
refundable in such form as may be prescribed.
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(2)
For all
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at the
end of the transition period shall be transferred to the Consolidated Fund of India, and shall be
distributed between the Centre and the States and amongst the States as per provisions of clause
(2) of article 270 of the Constitution; and the balance fifty percent shall be distributed amongst
the States in the ratio of their total revenues from SGST in the last year of the transition period.
11.
OTHER PROVISIONS RELATING TO CESS
(1) The provisions of the Central Goods and Tax Act, 2016, and the rules made thereafter,
including those relating to assessment, input tax credit (subject to sub-section (3)), non-levy,
short-levy, interest, appeals, offences and penalties, shall, as far as may be, apply mutatis
mutandis in relation to the levy and collection of the cess leviable under section 8 on the intra-
state supply of goods and services, as they apply in relation to the levy and collection of Central
Goods and Services Tax on such intra-state supplies under the said
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