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  3. Govt to provide compensation to states for any revenue loss for five years

Govt to provide compensation to states for any revenue loss for five years

21 Jul 2015 Evaluate

Government in its quest to roll out GST from April 1 next year has given in to one of the major demands from several opposition parties and has agreed to provide compensation to states for any revenue loss for five years. A Parliamentary Committee, which scrutinised the crucial GST Bill, has prepared a draft report, the report will be considered by the Select Committee of Rajya Sabha when it is expected to be adopted for presentation in Parliament. As per the schedule, the report is to be submitted to Rajya Sabha by July 24, three days after the commencement of the Monsoon Session of Parliament.

The amendment relates to Clause 19 of the Bill, amended version of which now reads as: “Parliament may, by law, on recommendation of the GST Council, provide for compensation to the states for loss of revenue arising on account of implementation of GST for a period of five years.” The earlier version said the compensation would be paid for “up to five years.” Although, the government argued that both words, according to the Constitution, meant the same thing.

The panel completed the consultation process last week when clause-by-clause discussion took place on the bill now the government will move an official amendment to the GST bill.The GST Bill has been passed by Lok Sabha and was referred to the Select Committee by Rajya Sabha.

The government is making all efforts to implement a single GST rate, which would subsume central excise, service tax and other local levies, from April 1, 2016. The three legislations - Central GST (CGST), State GST (SGST) and integrated GST (iGST) - will have to be approved by the respective legislatures. For the rollout of GST, the CBEC is already preparing model legislations, which will be put up for comments from stakeholders after Parliament approves GST Constitution Amendment Bill.

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