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GST COMPENSATION CESS

Goods and Services Tax - GST - By: - Mr. M. GOVINDARAJAN - Dated:- 1-12-2016 Last Replied Date:- 1-12-2016 - In order to compensate the States for the introduction of Goods and Service Tax regime, the Central Government proposed to levy a new cess called as through the Goods and Services Tax (Compensation to the States for loss of Revenue) Bill, 2016. The Government proposes to introduce the said bill in the winter session of Parliament and it may be introduced in the first week of December, 201 .....

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s will also be prescribed. The cess will be levied on the value determined under Section 15 of Model GST law. Section 15 deals the value of taxable supply. The Cess will also cover on the supplies on which tax is payable on reverse charge basis. The rate of cess may be prescribed on the recommendations of the Council. The levy of cess is for the purpose 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 f .....

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Model GST law. The taxable person shall pay the amount payable under the Act in the manner as may be prescribed. Refund of Cess paid may be applied in prescribed form. For the purposes of cess, all the provisions, except for the format to be filed, of the Model GST law and the rules made there under shall apply in relation to the levy and collection of the cess. Section 11(1) provides that the provisions of CGST and the rules made there under including those relating to assessment, input tax cr .....

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ollection of the cess on the inter-state supply as they apply in relation to the levy and collection of IGST. GST Compensation Fund Section 10 provides that the proceeds of the shall be credited to a non lapsable fund known as the GST Commission Fund in the Public Account and shall be utilized for making compensation to the States for their loss in revenue. All amounts payable to the States shall be paid from the GST Compensation Fund. Procedure for payment of compensation 1. The Bill is to deci .....

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hat the projected nominal growth rate of revenue subsumed for a State during the transition period shall be 14% per annum. 4. Section 5 provides the calculation of the base year Revenue of a State, i.e., 2015 - 16. The base year revenue of a State shall be the sum of the revenue collected by the State and local bodies during the base year on account of the taxes levied net of refunds with respect to the following taxes imposed by the respective State or Centre, which are subsumed into GST- VAT, .....

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ambling or any other tax levied by the concerned State under the erstwhile Entry 62 of List II of VII Schedule prior to amendment; Taxes on advertisement or any other tax levied by the concerned State under the erstwhile Entry 55 of List II of the VII Schedule to the Constitution, prior to amendment; Duties of excise on medicinal and toilet preparations levied by the Union but collected and retained by the concerned State under the erstwhile Article 268 of the Constitution, prior to amendment; A .....

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total base year revenue of the State, subject to the conditions as may be prescribed; In respect of any State, if any part of revenue 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. 5. Section 5(3) provides that the following shall not be included in the calculation of the base revenue for the State- Any taxes levied under the erstwhile Entry 54 of List II of .....

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l gas, aviation turbine fuel and alcoholic liquor for human consumption; Entertainment tax levied by the State but collected by local bodies, under any Act enacted under the erstwhile Entry 62 of List II of VII Scheduleprior to amendment. 6. The base year revenue as calculated by the State shall be got audited by the Comptroller and Auditor General of India ( C&AG for short). 7. Section 6 provides for the calculation of projected revenue for any year. This section provides that the projected .....

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d in any financial year during the transaction period, the excess amount shall be adjusted against the compensation payable in the subsequent financial year. 9. Section 7(2) provides that the total GST compensation payable shall be calculated as detailed below- The projected revenue for any financial year during the transition period, that have accrued to a State shall be calculated; The actual revenue collectedby a State in any financial year during the transition period net of refunds and the .....

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; The actual revenue collected by a State till the end of the relevant quarter net of refunds; The provisional GST compensation payable at the end of the relevant quarter shall be the difference between the projected revenue and the actual revenue collected by a State in the said period reduced by the provisional GST compensation paid till the end of the previous quarter. 11. Section 7(4) provides that in case of any difference between the final GST compensation amount payable to a State and the .....

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