THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
GST
Dated:- 27-3-2017
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
\nTHE GOODS AND SERVICES TAX (COMPENSATION TO STATES) BILL, 2017
\nA
\nBILL
\nto provide for compensation to the States for the loss of revenue arising on account of
\nimplementation of the goods and services tax in pursuance of the provisions of
\nthe Constitution (One Hundred and First Amendment) Act, 2016.
\nBE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:-
\nShort title, extent and commencement.
\n(1) This Act may be called the Goods and Services Tax (Compensation to States) Act, 2017.
\n(2) It extends to the whole of India.
\n(3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
\nDefinitions.
\n2. (1) In this Act, unless the context otherwise requires,-
\n(a) “central tax” means the central goods and services tax levied and collected under the Cent<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Tax Act; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n shall be taken as the base year. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n t of refunds, under the following taxes shall not be included in the calculation of the base year revenue for that State, namely:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n cts of the Central Government and State Governments under which the specific taxes are being subsumed into the goods and services tax shall be such as may be notified. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the following manner, namely: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n transition period shall be- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nd Services Tax Act, and such inter-State supplies of goods or services or both as provided for in section 5 of the Integrated Goods and Services Tax Act, and collected in 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: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n of cess as payable under this Act in such manner; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be laid before each House of Parliament. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n the Constitution, under sub-section (3) of section 5; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n m the commencement of this Act. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n \nFifteen per cent. ad valorem. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Auditor General of India; = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n he above objectives. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n or remission given by a State Government to promote industrial investment in the said State would be included in the total base year revenue of the States, in respect of States referred to in sub-clause (g) of clause (4) of article 279A of the Constitution. Sub-clause (6) of the clause 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n to the States for the loss of revenue arising on account of = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n projected for the transition = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ase year = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n of the base year revenue for = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n tate, subject to such conditions as may be prescribed. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n y State shall be calculated in the following manner, namely:\u2014 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n l revenue collected by a State till the end of relevant two months = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n supplies of goods or services or = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ariff Act, 1975. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n \nand any expenditure in connection with such audit shall be payable by the Central Government = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n all or any of the following matters, namely:\u2014 = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ppear to = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n lomerated. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n he projected nominal growth rate of revenue subsumed for a State during = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n period shall be transferred to the = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n used directly for = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) GSTDated:- 27-3-2017THE 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 … Continue reading “THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-2257","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/2257","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2257"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/2257\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2257"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n(j) “prescribed” means prescribed by rules made, on the recommendations of the Council, under this Act;
\n(k) “projected growth rate” means the rate of growth projected for the transition period as per section 3;
\n(l) “Schedule” means the Schedule appended to this Act;
\n(m) “State” means,
\n(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
\n(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(n) “State tax” means the State goods and services tax levied and collected under the respective State Goods and Services Tax Act;
\n(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;
\n(p) “taxable supply'' means a supply o<\/p>\n
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\nBase year revenue.
\n5. (1) Subject to the provision of sub-sections (2), (3), (4), (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:
\n(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;
\n(b) the central sales tax levied under the Central Sales Tax Act, 1956 (74 of 1956.);
\n(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;
\n(d) the taxes <\/p>\n
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\n(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;
\n(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;
\n(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 turbin<\/p>\n
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\n(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.
\n(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.
\nProjected revenue for any year
\n6. 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.
\nIllustration-If the base year revenue for 2015-16 for a concerned State, calculated as per section 5 is one hundred rupees<\/p>\n
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\n(a) the projected revenue for any financial year during the transition period, which could have accrued to a State in the absence of the goods and services tax, shall be calculated as per section 6;
\n(b) the actual revenue collected by a State in any financial year during the transition period shall be-
\n (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;
\n (ii) the integrated goods and services tax apportioned to that State; and
\n (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,
\nas certified by the Comptroller and Auditor-General of India;
\n(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 r<\/p>\n
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\n (i) the actual revenue from State tax collected by the State, net of refunds given by the State under Chapters XI and XX of the State Goods and Services Tax Act;
\n (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
\n (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;
\n(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 transiti<\/p>\n
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\nProvided 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.
\n(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<\/p>\n
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\n(b) furnish such returns in such forms, along with the returns to be filed under the Central Goods and Services Tax Act; and
\n(c) apply for refunds of such cess paid in such form, as may be prescribed.
\n(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.
\nCrediting proceeds of cess to Fund
\n10. (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 shal<\/p>\n
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\nOther provisions relating to cess.
\n11. (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.
\n(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 rela<\/p>\n
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\n(b) the conditions subject to which any part of revenues not credited in the Consolidated Fund of the respective State shall be included in the total base year revenue of the State, under sub-section (6) of section 5;
\n(c) the manner of refund of compensation by the States to the Central Government under sub-section (6) of section 7;
\n(d) the manner of levy and collection of cess and the period of its imposition under sub-section (1) of section 8;
\n(e) the manner and forms for payment of cess, furnishing of returns and refund of cess under sub-section (1) of section 9; and
\n(f) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be made, by rules.
\nLaying of rules before Parliament.
\n13. 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 <\/p>\n
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\n(2) Every order made under this section shall, as soon as may be after it is made, be laid before each House of Parliament.
\nTHE SCHEDULE
\n[See section 8 (2)]
\n1. In this Schedule, 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).
\n2. 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.
\nS.No.
\nDescription of supply of goods or services
\nTariff item, heading, sub-heading, Chapter, or supply of goods or services, as the case may be
\nThe maximum rate at which goods and services tax compansation cess may be collected
\n(1)
\n(2)
\n(3)
\n(4)
\n1.
\nPan Masala.
\n2106 90 20
\nOne hundred<\/p>\n
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\nSTATEMENT OF OBJECTS AND REASONS
\nThe Goods and Services Tax (Compensation to States) Bill, 2017, provides for payment of 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 in accordance with the provisions of section 18 of the Constitution (One Hundred and First Amendment) Act, 2016.
\n2. 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 <\/p>\n
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\n(e) to provide that in case of the eleven Special category States referred to in article 279A of the Constitution, the revenue foregone on account of exemption of taxes granted by States shall be counted towards the definition of Revenue for the base year 2015-16;
\n(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;
\n(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;
\n(h) the<\/p>\n
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\nFINANCIAL MEMORANDUM
\nClause 10 of the Bill seeks to provide that the proceeds of the goods and services tax compensation cess, as well as such other amounts as may be recommended by the Goods and Services Tax 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 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 <\/p>\n
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\n2. 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.
\n3. Clause 8 of the Bill seeks to levy a goods and services tax compensation cess on<\/p>\n
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\nimplementation of the goods and services tax in pursuance of the provisions of
\nthe Constitution (One Hundred and First Amendment) Act, 2016.
\nBE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:\u2013
\n1. (1) This Act may be called the Goods and Services Tax (Compensation to States)
\nAct, 2017.
\n(2) It extends to the whole of India.
\n(3) It shall come into force on such date as the Central Government may, by notification
\nin the Official Gazette, appoint.
\n2. (1) In this Act, unless the context otherwise requires,\u20ac\u2022
\n(a) “central tax” means the central goods and services tax levied and collected
\nunder the Central Goods and Services Tax Act;
\nShort title,
\nextent and
\ncommencement.
\nDefinitions.
\n2
\n(b) “Central Goods and Services Tax Act\u201d means the Central Goods and Services
\nTax Act, 2017;
\n(c) “cess” means the goods and services tax compensation cess levied under
\nsectio<\/p>\n
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\nperiod as per section 3;
\n(1) “Schedule” means the Schedule appended to this Act;
\n(m) “State” means,\u20ac\u2022
\n5
\n10
\n15
\n20
\n(i) for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under 25
\nthe Central Goods and Services Tax Act; and
\n(ii) for the purposes of sections 8, 9, 10, 11, 12, 13 and 14 the States as
\ndefined under the Central Goods and Services Tax Act and the Union territories
\nas defined under the Union Territories Goods and Services Tax Act;
\n(n) “State tax\u201d means the State goods and services tax levied and collected
\nunder the respective State Goods and Services Tax Act;
\n(o) “State Goods and Services Tax Act” means the law to be made by the State
\nLegislature for levy and collection of tax by the concerned State on supply of goods or
\nservices or both;
\n(p) “taxable supply” means a supply of goods or services or both which is
\nchargeable to the cess under this Act;
\n(q) “transition date\u201d shall mean, in respect o<\/p>\n
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\nrevenue for a State shall be the sum of the revenue collected by the State and the local bodies
\nduring the base year, on account of the taxes levied by the respective State or Union and net
\nof refunds, with respect to the following taxes, imposed by the respective State or Union,
\n10 which are subsumed into goods and services tax, namely:\u2014
\n74 of 1956.
\n15
\n20
\n25
\n30
\n35
\n40
\n45
\n(a) the value added tax, 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 List) of
\nthe Seventh Schedule to the Constitution;
\n(b) the central sales tax levied under the Central Sales Tax Act, 1956;
\n(c) the entry tax, octroi, local body tax or any other tax levied by the concerned State
\nunder the erstwhile entry 52 of List-II (State List) of the Seventh Schedule to the Constitution;
\n(d) the taxes on luxuries, including taxes on entertainments, amusements, betting and
\ngambling or any o<\/p>\n
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\nthat State, namely:-
\n(a) any taxes levied under any Act enacted under the erstwhile entry 54 of List-II
\n(State List) of the Seventh Schedule to the Constitution, prior to the coming into force
\nof the provisions of the Constitution (One Hundred and First Amendment) Act, 2016,
\non the sale or purchase of petroleum crude, high speed diesel, motor spirit (commonly
\nknown as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human
\nconsumption;
\n(b) tax levied under the Central Sales Tax Act, 1956, on the sale or purchase of
\npetroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
\ngas, aviation turbine fuel and alcoholic liquor for human consumption;
\n(c) any cess imposed by the State Government on the sale or purchase of
\npetroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
\ngas, aviation turbine fuel and alcoholic liquor for human consumption; and
\n(d) the entertainment tax le<\/p>\n
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\n(4) The Acts of the Central Government and State Governments under which the
\nspecific taxes are being subsumed into the goods and services tax shall be such as may be
\nnotified.
\n(5) The base year revenue shall be calculated as per sub-sections (1), (2), (3) and (4)
\non the basis of the figures of revenue collected and net of refunds given in that year, as
\naudited by the Comptroller and Auditor-General of India.
\n(6) In respect of any State, if any part of revenues mentioned in sub-sections (1), (2),
\n(3) and (4) are not credited in the Consolidated Fund of the respective State, the same shall
\nbe included in the total base year revenue of the State, subject to such conditions as may be
\nprescribed.
\n6. The 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.
\nIllustration-If the base year revenue for 2015-16 for a concerned State, calculat<\/p>\n
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\n(a) the projected revenue for any financial year during the transition period,
\nwhich could have accrued to a State in the absence of the goods and services
\ntax, shall be calculated as per section 6;
\n(b) the actual revenue collected by a State in any financial year during the
\ntransition period shall be\u20ac\u2022
\n(i) the actual revenue from State tax collected by the State, net of
\nrefunds given by the said State under Chapters XI and XX of the State
\nGoods and Services Tax Act;
\n30
\n35
\n40
\n(ii) the integrated goods and services tax apportioned to that State;
\n45
\nand
\n(iii) any collection of taxes on account of the taxes levied by the
\nrespective State under the Acts specified in sub-section (4) of section 5,
\nnet of refunds of such taxes,
\nas certified by the Comptroller and Auditor-General of India;
\n50
\n5
\n(c) the total compensation payable in any financial year shall be the difference
\nbetween the projected re<\/p>\n
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\nperiod in any financial year during the transition period shall be-
\n(i) the actual revenue from State tax collected by the State, net of refunds
\ngiven by the State under Chapters XI and XX of the State Goods and Services
\nTax Act;
\n(ii) the integrated goods and services tax apportioned to that State, as
\ncertified by the Principal Chief Controller of Accounts of the Central Board of
\nExcise and Customs; and
\n(iii) any collection of taxes levied by the said State, under the Acts specified
\nin sub-section (4) of section 5, net of refund of such taxes;
\n(c) the provisional compensation payable to any State at the end of the relevant
\ntwo month period in any financial year shall be the difference between the projected
\nrevenue till the end of the relevant period in accordance with clause (a) and the actual
\nrevenue collected by a State in the said period as referred to in clause (b), reduced by
\nthe provisional compensat<\/p>\n
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\nboth, as provided for in section 9 of the Central Goods and Services Tax Act, and such inter-
\nState supplies of goods or services or both as provided for in section 5 of the Integrated
\n45 Goods and Services Tax Act, and collected in such manner as may be prescribed, on the
\nrecommendations 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 with
\neffect from the date from which the provisions of the Central Goods and Services Tax Act is
\nbrought into force, for a period of five years or for such period as may be prescribed on the
\n50 recommendations of the Council:
\nLevy
\nand
\ncollection of
\ncess.
\nReturns,
\npayments and
\nrefunds.
\n6
\nProvided that no such cess shall be leviable on supplies made by a taxable person who
\nhas decided to opt for composition levy under section 10 of the Central Goods and Services
\nTax Act.
\n(2) The cess shall be <\/p>\n
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\n9. (1) Every taxable person, making a taxable supply of goods or services or both,
\nshall\u20ac\u2022
\n(a) pay the amount of cess as payable under this Act in such manner;
\n5
\n10
\n51 of 1975.
\n15
\n52 of 1962.
\n(b) furnish such returns in such forms, along with the returns to be filed under
\nthe Central Goods and Services Tax Act; and
\n20
\n(c) apply for refunds of such cess paid in such form,
\nCrediting
\nproceeds of
\ncess to Fund.
\nas may be prescribed.
\n(2) For all purposes of furnishing of returns and claiming refunds, except for the form
\nto be filed, the provisions of the Central Goods and Services Tax Act and the rules made 25
\nthereunder, shall, as far as may be, apply in relation to the levy and collection of the cess
\nleviable under section 8 on all taxable supplies of goods or services or both, as they apply in
\nrelation to the levy and collection of central tax on such supplies under the said Act or the
\nrules made thereunder.
\n10. (1) The proceeds of the cess le<\/p>\n
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\nto the Comptroller and Auditor-General of India.
\n(5) The accounts of the Fund, as certified by the Comptroller and Auditor-General of
\nIndia or any other person appointed by him in this behalf together with the audit report 45
\nthereon shall be laid before each House of Parliament.
\n7
\n11. (1) The provisions of the Central Goods and Services Tax Act, and the rules made
\nthereunder, including those relating to assessment, input tax credit, non-levy, short-levy,
\ninterest, appeals, offences and penalties, shall, as far as may be, mutatis mutandis, apply, in
\nrelation to the levy and collection of the cess leviable under section 8 on the intra-State
\n5 supply of goods and services, as they apply in relation to the levy and collection of central
\ntax on such intra-State supplies under the said Act or the rules made thereunder.
\n(2) The provisions of the Integrated Goods and Services Tax Act, an<\/p>\n
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\n(a) the conditions which were included in the total base year revenue of the
\nStates, referred to in sub-clause (g) of clause (4) of article 279A of the Constitution,
\nunder sub-section (3) of section 5;
\n(b) the conditions subject to which any part of revenues not credited in the
\nConsolidated Fund of the respective State shall be included in the total base year
\nrevenue of the State, under sub-section (6) of section 5;
\n(c) the manner of refund of compensation by the States to the Central Government
\nunder sub-section (6) of section 7;
\n(d) the manner of levy and collection of cess and the period of its imposition
\nunder sub-section (1) of section 8;
\n(e) the manner and forms for payment of cess, furnishing of returns and refund
\nof cess under sub-section (1) of section 9; and
\n(f) any other matter which is to be, or may be, prescribed, or in respect of which
\nprovision is to be made, by rules.
\n13. Every rule made under this Act <\/p>\n
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\nit to be necessary or expedient for removing the difficulty:
\nProvided that no order shall be made under this section after the expiry of three years
\nfrom the commencement of this Act.
\n(2) Every order made under this section shall, as soon as may be after it is made, be laid
\n50 before each House of Parliament.
\nOther
\nprovisions
\nrelating to
\ncess.
\nPower to
\nmake rules.
\nLaying of
\nrules before
\nParliament.
\nPower to
\nremove
\ndifficulties.
\nTHE SCHEDULE
\n[See section 8 (2)]
\n1. In this Schedule, reference to a \u201ctariff item\u201d, \u201cheading\u201d, \u201csub-heading” and
\n“Chapter”, wherever they occur, shall mean respectively a tariff item, heading, sub-heading
\nand Chapter in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
\n2. The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975
\n(51 of 1975), the section and Chapter Notes and the General Explanatory Notes of the First
\nSchedule shall, so far as may be, appl<\/p>\n
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\nAerated waters.
\nMotor cars and other motor
\nvehicles principally designed
\nfor the transport of persons
\n(other than motor vehicles
\nfor the transport of ten or
\nmore persons, including the
\ndriver), including station
\nwagons and racing cars.
\nAny other supplies.
\n2202 10 10
\n8703
\nFifteen per cent. ad valorem.
\nFifteen per cent. ad valorem.
\n8
\nFifteen per cent. ad valorem.
\nSTATEMENT OF OBJECTS AND REASONS
\nThe Goods and Services Tax (Compensation to States) Bill, 2017, provides for payment
\nof compensation to the States for loss of revenue arising on account of implementation of
\nthe goods and services tax for a period of five years in accordance with the provisions of
\nsection 18 of the Constitution (One Hundred and First Amendment) Act, 2016.
\n2. The Constitution (One Hundred and First Amendment) Act, 2016, has amended the
\nConstitution to facilitate the introduction of goods and services tax in the Country. The
\namendments made in the Constitution confer simultaneous<\/p>\n
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\nthe transition period shall be fourteen per cent. per annum;
\n(d) to provide that the compensation shall be released bi-monthly against the
\nfigures given by the Central accounting authorities provisionally and final adjustment
\nshall be done after getting audited accounts of the year from the Comptroller and
\nAuditor General of India;
\n(e) to provide that in case of the eleven Special category States referred to in
\narticle 279A of the Constitution, the revenue foregone on account of exemption of
\ntaxes granted by States shall be counted towards the definition of Revenue for the
\nbase year 2015-16;
\n(f) the revenues of States that were not credited to the Consolidated Fund of the
\nStates but were directly devolved to “mandi” or “municipalities” would also be included
\nin the definition of 'revenue subsumed' if these were collected under the authority of
\nentries 52, 54, 55 and 62 of List II of Seventh Schedule of<\/p>\n
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\nConsolidated Fund of India as the share of the Centre, and the balance fifty per cent.
\nshall be distributed amongst the States and Union territories in the ratio of their total
\nrevenues from the State goods and services tax or the Union territory goods and
\nservices tax, as the case may be, in the last year of the transition period.
\n4. The Bill seeks to achieve the above objectives.
\nNEW DELHI;
\nThe 23rd March, 2017.
\nARUN JAITLEY.
\nFINANCIAL MEMORANDUM
\nClause 10 of the Bill seeks to provide that the proceeds of the goods and services tax
\ncompensation cess, as well as such other amounts as may be recommended by the Goods
\nand Services Tax Council, shall be credited to a non-lapsable Fund known as the Goods and
\nServices Tax Compensation Fund, which shall form part of the public account of India and
\nshall be utilised for purposes specified in the clause 8 of the Bill. Sub-clause (3) of clause 10
\nof the Bill seeks to provide that fifty per cent.<\/p>\n
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\nthe payments of goods and services tax compensation to the States.
\n11
\nMEMORANDUM REGARDING DELEGATED LEGISLATION
\nClause 5 of the Bill seeks to provide the detailed procedure for calculating the base
\nyear revenue of a State on the recommendations of the Goods and Services Tax Council.
\nSub-clause (3) of the said clause empowers the Central Government to prescribe the conditions
\nsubject to which, the amount of revenue foregone on account of exemptions or remission
\ngiven by a State Government to promote industrial investment in the said State would be
\nincluded in the total base year revenue of the States, in respect of States referred to in
\nsub-clause (g) of clause (4) of article 279A of the Constitution. Sub-clause (6) of the
\nclause 5 empowers the Central Government to prescribe the conditions subject to which, any
\npart of revenues not credited in the Consolidated Fund of a State shall be included in the
\ntotal base year revenue of the concerned State.
\n2. Cl<\/p>\n
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