Draft GST Compensation Law
GST
Dated:- 26-11-2016
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\n=============
\nDocument 1
\nGOODS AND SERVICES TAX (COMPENSATION TO THE
\nSTATES FOR LOSS OF REVENUE) BILL, 2016
\n(No. of 2016)
\n[_th
\n2016]
\nA Bill to provide for compensation to the States for loss of revenue arising on account of
\nimplementation of the goods and services tax for a period of five years as per Section 18 of The
\nConstitution (One Hundred and First Amendment) Act, 2016.
\nBE it enacted by Parliament in the Sixty-seventh Year of the Republic of India as follows:-
\n1.
\nSHORT TILE AND COMMENCEMENT
\n(1)
\n(2)
\n(3)
\nThis Act may be called the Goods and Services Tax (Compensation to the States for Loss
\nof Revenue) Act, 2016.
\nIt extends to the whole of India.
\nIt shall come into force on such date as the Central Government may, by notification in
\nthe Official Gazette, appoint in this behalf.
\n2.
\nDEFINITIONS
\n(1)
\n“base year” shall have the meaning assigned to it in section 4;
\n(2)
\n“base year rev<\/p>\n
= = = = = = = =<\/p>\n
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\nper section 3;
\n1
\n(11) “projected revenue” shall have the meaning assigned to it in section 6;
\n(12)
\n“State” shall include Union Territories with Legislature;
\n(13)
\n“taxable person” shall have the meaning as assigned to it in the Central Goods and
\nServices Tax Act, 2016;
\n(14)
\n“taxable supply” means a supply of goods and\/or services which is chargeable to the
\nGoods and Services Tax Compensation Cess under this Act;
\n(15)
\n“transition date” shall mean, in respect of any State, the date on which the Goods and
\nServices Tax Act of the concerned state comes into force;
\n(16) \u201ctransition period” means a period of five years from the transition date;
\n(17) words and expressions used but not defined in this Act and defined in the Central Goods
\nand Services Tax Act, 2016 (… of 2016), shall have the meanings respectively assigned to them in
\nthat Act, in the context of GST Compensation Cess levied on taxable supplies of go<\/p>\n
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\non account of the taxes levied by the respective State or Centre, net of refunds, with respect to
\nthe following taxes imposed by the respective State or Centre, which are subsumed into goods
\nand services tax:
\n(a) Value Added Tax (VAT), sales tax, purchase tax, tax collected on works contract, or any
\nother tax levied by the concerned State under the erstwhile Entry 54 of List-II (State
\nList) of the Seventh Schedule to the Constitution, prior to bringing into effect the
\nprovisions of the Constitution (One Hundred and First Amendment) Act, 2016;
\n(b) Central Sales Tax (CST) levied by the Central Sales Tax Act, 1956;
\n(c) Entry tax, octroi, local body tax or any other tax levied by the concerned State under
\nthe erstwhile Entry 52 of List-II (State List) of the Seventh Schedule to the Constitution,
\nprior to bringing into effect the provisions of the Constitution (One Hundred and First
\nAmendment) Act, 2016;
\n2
\n(d) Taxes on luxuries, including taxes on entertainments, amusemen<\/p>\n
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\nAct of the concerned State.
\n(2) The Acts of the Central and State Governments under which the specific taxes are being
\nsubsumed into the goods and services tax shall be as notified.
\n(3) The revenue collected during the base year in a State, net of refunds, on account of
\nfollowing taxes, shall not be included in the calculation of the base year revenue for that State:
\n(4)
\n(a) Any taxes levied under any Act made under the erstwhile Entry 54 of List-II (State List)
\nof the Seventh Schedule to the Constitution, prior to bringing into effect the provisions
\nof the Constitution (One Hundred and First Amendment) Act, 2016, on the sale or
\npurchase of petroleum crude, high speed diesel, motor spirit (commonly known as
\npetrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption;
\n(b) Any taxes levied under the Central Sales Tax Act, 1956 (74 of 1956) on the sale or
\npurchase of petroleum crude, <\/p>\n
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\nunder the laws specified under sub-section (2) to promote industrial investment in the State
\nwould be included in the total base year revenue of the State, subject to the conditions as may be
\nprescribed.
\n(6)
\nThe base year revenue shall be calculated as per sub-sections (1), (2), (3), (4) and (5) on
\nthe basis of the figures of revenue collected net of refunds given in that year, as audited by the
\nComptroller and Auditor General of India.
\n3
\n(7)
\nIn respect of any State, if any part of revenues mentioned in sub-sections (1), (2) and (3)
\nare not credited in the Consolidated Fund of the respective State, the same shall be included in
\nthe total base year revenue of the State, subject to the conditions as may be prescribed.
\n6.
\nPROJECTED REVENUE FOR ANY YEAR
\nThe projected revenue for any year in a State shall be calculated by applying the
\nprojected growth rate over the base year revenue of that State.
\n7.
\n(1)
\nIllustration: If the base year revenue for 2015-16 f<\/p>\n
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\n(a) The projected revenue for any financial year during the transition period, that could
\nhave accrued to a State in the absence of GST, shall be calculated as per section 6.
\n(b) The actual revenue collected by a State in any financial year during the transition
\nperiod would be the actual revenue from State Goods and Services Tax collected by the
\nState, net of refunds given by the State under Chapter XI of the SGST Act, and the
\nIntegrated Goods and Services Tax apportioned to that State, as certified by the
\nComptroller and Auditor General of India.
\n(c) Total GST compensation payable in any financial year shall be the difference between
\nthe projected revenue for any financial year and the actual revenue collected by a State
\nas defined in sub-section (b).
\n(3) The loss of revenue at the end of any quarter in any year for a State during the transition
\nperiod shall be calculated at the end of every quarter as follows:
\n(a) The projected revenue that could have been earned<\/p>\n
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\ntill the end of the relevant period as per sub-section (3) (a) and the actual revenue
\ncollected by a State in the said period as defined in sub-section (3)(b), reduced by the
\nprovisional GST compensation paid to a State till the end of the previous quarter in the
\nsaid financial year during the transition period.
\nIn case of any difference between the final GST compensation amount payable to a State
\ncalculated as per provisions of sub-section (2) upon receipt of the audited revenue figures from
\nthe CAG, and the total provisional GST compensation amount released to a State in the said
\nfinancial year as per sub-section (3), the same shall be adjusted against release of GST
\ncompensation to the State in the subsequent financial year.
\n(5) Where no compensation is due to be released in any financial year, and in case any
\nexcess amount has been released to a State in the previous year, this amount shal<\/p>\n
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\nthe recommendations of the Council, for the purposes of providing compensation to the States
\nfor loss of revenue arising on account of implementation of the goods and services tax for a
\nperiod of five years, w.e.f. the date from which the CGST Act is brought into force.
\nProvided that no such cess shall be leviable under this section on supplies made by a
\ntaxable person permitted to opt for composition levy under section 8 of the CGST Act, 2016.
\n(1)
\n9.
\nRETURNS, PAYMents and Refunds
\n(1) Every taxable person registered under CGST Act, 2016, making a taxable supply of goods
\nand\/or services, shall furnish such returns in such formats, as may be prescribed, along with the
\nreturns to be filed under the Central Goods and Services Tax Act, 2016, shall pay the amount
\npayable under the Act in the manner as may be prescribed and apply for refunds of cess paid and
\nrefundable in such form as may be prescribed.
\n\u00d1\u0081\u00d0\u00bb
\n5
\n(2)
\nFor all<\/p>\n
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\nend of the transition period shall be transferred to the Consolidated Fund of India, and shall be
\ndistributed between the Centre and the States and amongst the States as per provisions of clause
\n(2) of article 270 of the Constitution; and the balance fifty percent shall be distributed amongst
\nthe States in the ratio of their total revenues from SGST in the last year of the transition period.
\n11.
\nOTHER PROVISIONS RELATING TO CESS
\n(1) The provisions of the Central Goods and Tax Act, 2016, and the rules made thereafter,
\nincluding those relating to assessment, input tax credit (subject to sub-section (3)), non-levy,
\nshort-levy, interest, appeals, offences and penalties, shall, as far as may be, apply mutatis
\nmutandis in relation to the levy and collection of the cess leviable under section 8 on the intra-
\nstate supply of goods and services, as they apply in relation to the levy and collection of Central
\nGoods and Services Tax on such intra-state supplies under the said <\/p>\n
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