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COMPENSATION TO STATES FOR REVENUE LOSS UNDER GST

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 11-3-2017 Last Replied Date:- 30-12-1899 - GST Council has approved a Bill for compensation to States for revenue loss arising out of introduction of GST in the country. A Bill called Goods and Services Tax (Compensation to the States for Loss of Revenue) Bill, 20... shall provide for compensation to the States for loss of revenue arising on account of implementation of the goods and Service Tax for a period of five years as per s .....

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f refunds, with taxes namely, VAT, CST, Entry tax, Octroi, local body tax, Luxury tax, Advertisement tax, Excise duty on medicinal and toilet preparation and any cess or surcharge levied by State Government. Taxes as subsumed to be considered Local bodies taxes (other than state taxes) excluded Service Tax in J & K State will be included in revenue To be calculated and released on a quarterly basis to States Cess for 5 years (GST Compensation Cess) to be levied Input tax credit of Cess will .....

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e 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: 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 (101st Amendment) Act, 2016.; Central Sales Tax (CST) .....

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st) of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions of the Constitution (101st Amendment) Act, 2016; Taxes on advertisement or any other tax levied by the concerned State under the erstwhile Entry 55 of List-II (State List) of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions of the Constitution (101st Amendment) Act, 2016; Duties of excise on medicinal and toilet preparations levied by the Union but collected and ret .....

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ot be included in the calculation of the base year revenue for that State: 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 (101st 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; Any taxes levi .....

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ted by local bodies, under any Act enacted under the erstwhile Entry 62 of List-II (State List) of the Seventh Schedule to the Constitution, prior to bringing into effect the provisions of the Constitution (101st Amendment) Act, 2016.. 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 ₹ 100, .....

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nancial year during the transition period, as per the CAG audited figures of revenue collected, the excess amount so released shall be adjusted against the GST compensation amount payable to the State in the subsequent financial year. The total GST compensation payable for any financial year during the transition period to any State shall be calculated as follows: The projected revenue for any financial year during the transition period, that could have accrued to a State in the absence of GST, .....

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he projected revenue for any financial year and the actual revenue collected by a State as defined in sub-section (b). 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. There shall be levied and collected in accordance with the provisions of this Act, a cess to be called the GST Compensation Cess at such rate as may be notified, but not exceeding…. per cent, on the value determined under sect .....

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ght into force. However, 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 GST Law. Salient Features of Compensation Bill The nominal growth rate of revenue subsumed for a State during the transition period is projected at 14% per annum. FY 2016-17 is considered as the base year for calculating the compensation amount payable in any FY during the transition period. The base year revenue for a State .....

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