Goods and Services Tax – GST – Dated:- 27-3-2017 – THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) BILL, 2017 A BILL to provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services tax in pursuance of the provisions of the Constitution (One Hundred and First Amendment) Act, 2016. BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:- Short title, extent and commencement. (1) This Act may be called the Goods and Services Tax (Compensation to States) Act, 2017. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Definitions. 2. (1) In this Act, unless the context otherwise requires,- (a) central tax means the central goods and services tax levied and collected under the Central Goods and Services Tax Act; (b) Central Goods an
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s of the Council, under this Act; (k) projected growth rate means the rate of growth projected for the transition period as per section 3; (l) Schedule means the Schedule appended to this Act; (m) State means,- (i) for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under the Central Goods and Services Tax Act; and (ii) for the purposes of sections 8, 9, 10, 11, 12, 13 and 14 the States as defined under the Central Goods and Services Tax Act and the Union territories as defined under the Union Territories Goods and Services Tax Act; (n) State tax means the State goods and services tax levied and collected under the respective State Goods and Services Tax Act; (o) State Goods and Services Tax Act means the law to be made by the State Legislature for levy and collection of tax by the concerned State on supply of goods or services or both; (p) taxable supply means a supply of goods or services or both which is chargeable to the cess under this Act; (q) transition date shal
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(5) and (6), the base year revenue for a State shall be the sum of the revenue collected by the State and the local bodies during the base year, on account of the taxes levied by the respective State or Union and net of refunds, with respect to the following taxes, imposed by the respective State or Union, which are subsumed into goods and services tax, namely:- (a) the value added tax, 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; (b) the central sales tax levied under the Central Sales Tax Act, 1956 (74 of 1956.); (c) the 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; (d) the taxes on luxuries, including taxes on entertainments, amusements, betting and gambling or any other tax levied by the concern
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amely:- (a) any taxes levied under any Act enacted under the erstwhile entry 54 of List-II (State List) of the Seventh Schedule to the Constitution, prior to the coming into force of 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) tax levied under the Central Sales Tax Act, 1956, (74 of 1956.) 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; (c) any cess imposed by the State Government 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; and (d) the entertainment tax levied by the State but collected by local bo
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tax shall be such as may be notified. (5) The base year revenue shall be calculated as per sub-sections (1), (2), (3) and (4) on the basis of the figures of revenue collected and net of refunds given in that year, as audited by the Comptroller and Auditor-General of India. (6) In respect of any State, if any part of revenues mentioned in sub-sections (1), (2), (3) and (4) 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 such conditions as may be prescribed. Projected revenue for any year 6. 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. Illustration-If the base year revenue for 2015-16 for a concerned State, calculated as per section 5 is one hundred rupees, then the projected revenue for financial year 2018-19 shall be as follows- Projected Revenue for 2018-19-100 (1+14/100)3 Calculation
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State in the absence of the goods and services tax, shall be calculated as per section 6; (b) the actual revenue collected by a State in any financial year during the transition period shall be- (i) the actual revenue from State tax collected by the State, net of refunds given by the said State under Chapters XI and XX of the State Goods and Services Tax Act; (ii) the integrated goods and services tax apportioned to that State; and (iii) any collection of taxes on account of the taxes levied by the respective State under the Acts specified in sub-section (4) of section 5, net of refunds of such taxes, as certified by the Comptroller and Auditor-General of India; (c) the total 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 referred to in clause (b). (4) The loss of revenue at the end of every two months period in any year for a State during the transition period shall be
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he State Goods and Services Tax Act; (ii) the integrated goods and services tax apportioned to that State, as certified by the Principal Chief Controller of Accounts of the Central Board of Excise and Customs; and (iii) any collection of taxes levied by the said State, under the Acts specified in sub-section (4) of section 5, net of refund of such taxes; (c) the provisional compensation payable to any State at the end of the relevant two month period in any financial year shall be the difference between the projected revenue till the end of the relevant period in accordance with clause (a) and the actual revenue collected by a State in the said period as referred to in clause (b), reduced by the provisional compensation paid to a State till the end of the previous two months period in the said financial year during the transition period. (5) In case of any difference between the final compensation amount payable to a State calculated in accordance with the provisions of sub-section (3)
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such manner as 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 with effect from the date from which the provisions of the Central Goods and Services Tax Act is brought into force, for a period of five years or for such period as may be prescribed on the recommendations of the Council: Provided that no such cess shall be leviable on supplies made by a taxable person who has decided to opt for composition levy under section 10 of the Central Goods and Services Tax Act. (2) The cess shall be levied on such supplies of goods and services as are specified in column (2) of the Schedule, on the basis of value, quantity or on such basis at such rate not exceeding the rate set forth in the corresponding entry in column (4) of the Schedule, as the Central Government may, on the recommendations of the Council, by notification in the Official Gaz
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apply for refunds of such cess paid in such form, as may be prescribed. (2) For all purposes of furnishing of returns and claiming refunds, except for the form to be filed, the provisions of the Central Goods and Services Tax Act and the rules made thereunder, shall, as far as may be, apply in relation to the levy and collection of the cess leviable under section 8 on all taxable supplies of goods or services or both, as they apply in relation to the levy and collection of central tax on such supplies under the said Act or the rules made thereunder. Crediting proceeds of cess to Fund 10. (1) The proceeds of the cess leviable under section 8 and such other amounts as may be recommended by the Council, shall be credited to a non-lapsable Fund known as the Goods and Services Tax Compensation Fund, which shall form part of the public account of India and shall be utilised for purposes specified in the said section. (2) All amounts payable to the States under section 7 shall be paid out of
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g to cess. 11. (1) The provisions of the Central Goods and Services Tax Act, and the rules made thereunder, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, as far as may be, mutatis mutandis, apply, 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 tax on such intra-State supplies under the said Act or the rules made thereunder. (2) The provisions of the Integrated Goods and Services Tax Act, and the rules made thereunder, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, mutatis mutandis, apply in relation to the levy and collection of the cess leviable under section 8 on the inter State supply of goods and services, as they apply in relation to the levy and collection of integrated tax on
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e total base year revenue of the State, under sub-section (6) of section 5; (c) the manner of refund of compensation by the States to the Central Government under sub-section (6) of section 7; (d) the manner of levy and collection of cess and the period of its imposition under sub-section (1) of section 8; (e) the manner and forms for payment of cess, furnishing of returns and refund of cess under sub-section (1) of section 9; and (f) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be made, by rules. Laying of rules before Parliament. 13. Every rule made under this Act by the Central Government shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or successive sessions aforesaid, both Houses agree in ma
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le, reference to a tariff item , heading , sub-heading and Chapter , wherever they occur, shall mean respectively a tariff item, heading, sub-heading and Chapter in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). 2. The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this Schedule. S.No. Description of supply of goods or services Tariff item, heading, sub-heading, Chapter, or supply of goods or services, as the case may be The maximum rate at which goods and services tax compansation cess may be collected (1) (2) (3) (4) 1. Pan Masala. 2106 90 20 One hundred and thirty-five per cent. ad valorem. 2. Tobacco and manufactured tobacco substitutes, including tobacco products. 24 Four thousand one hundred and seventy rupees per thousand sticks or two hundred and ninety per cent. ad valor
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s tax for a period of five years in accordance with the provisions of section 18 of the Constitution (One Hundred and First Amendment) Act, 2016. 2. The Constitution (One Hundred and First Amendment) Act, 2016, has amended the Constitution to facilitate the introduction of goods and services tax in the Country. The amendments made in the Constitution confer simultaneous powers upon Parliament and the State Legislatures to make laws for levy of goods and services tax on the supplies of goods or services or both. Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016, provides that, Parliament shall, by law, on the recommendations of the Goods and Services Tax Council, 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. . 3. The Goods and Services Tax (Compensation to States) Bill, 2017, inter alia, provides for the following, namely:- (a) to provide that the financia
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e base year 2015-16; (f) the revenues of States that were not credited to the Consolidated Fund of the States but were directly devolved to mandi or municipalities would also be included in the definition of 'revenue subsumed' if these were collected under the authority of entries 52, 54, 55 and 62 of List II of Seventh Schedule of the Constitution and were subsumed in the goods and services tax; (g) to generate resources to compensate States for five years for any loss of revenue suffered by them on account of implementation of goods and services tax, a cess shall be levied on such goods, as recommended by the Goods and Services Tax Council, over and above the goods and services tax on that item; (h) the proceeds of the goods and services tax compensation cess shall be credited to a non-lapsable Fund known as the Goods and Services Tax Compensation Fund in the Public Account and all amounts payable to the States as goods and services tax compensation shall be paid from the Goo
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nown as the Goods and Services Tax Compensation Fund, which shall form part of the public account of India and shall be utilised for purposes specified in the clause 8 of the Bill. Sub-clause (3) of clause 10 of the Bill seeks to provide that fifty per cent. of the amount remaining unutilised in the goods and services tax compensation fund at the end of the transition period shall be transferred to the Consolidated Fund of India as the share of Centre, and the balance fifty per cent. shall be distributed amongst the States and the Union territories in the ratio of their total revenues from the State goods and services tax or the Union territory goods and services tax, as the case may be, in the last year of the transition period. 2. Since the central goods and services tax rate shall be arrived at so as to protect the present revenues of the Central Government from the indirect taxes being subsumed under goods and services tax, the Union Government would need additional source of reven
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e 5 empowers the Central Government to prescribe the conditions subject to which, any part of revenues not credited in the Consolidated Fund of a State shall be included in the total base year revenue of the concerned State. 2. Clause 7 of the Bill seeks to provide the detailed procedure for calculating and releasing the goods and services tax compensation amount to a State. Sub-clause (6) of clause 7 empowers the Central Government to prescribe the manner of refund of compensation by a State to the Central Government, in case excess goods and services tax compensation is paid to the said State by the Central Government. 3. Clause 8 of the Bill seeks to levy a goods and services tax compensation cess on certain supplies of goods and services. Sub-clause (1) of clause 8 empowers the Central Government to notify the manner of levy and collection of the cess and the period of its imposition. 4. Clause 9 of the Bill seeks to provide that every taxable person shall pay the cess, furnish ret
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