Post-implementation of the Goods and Services Tax (GST) laws which aims at “One nation, One Tax, One Market,” the Central Government has reportedly released Rs 8,698 crore to States to compensate them for revenue loss due to the new tax regime.
Goods and Services Tax, being a destination based tax, has caused a huge revenue loss to certain manufacturing States. With a view to compensate the loss to these States, the Government has introduced Goods and Services Tax Compensation Cess on interstate and intrastate transactions of certain goods and services on the value of supply in addition to the GST tax.
This is meant to compensate the state governments in the first five years from the implementation of the new indirect tax regime. The revenue for each state will be calculated by applying the projected revenue growth rate of 14 percent with 2015-16 as the base year.
All states barring Rajasthan and Arunachal Pradesh, have been given compensation for the first two months (July-August) after GST rollout. “Rs 8,698 crore has been paid to states as compensation for July and August. This is 58 per cent of the total cess revenue of Rs 15,060 crore in the two months,” Bihar deputy chief minister Sushil Modi said.
Compensation was not paid to Arunachal Pradesh because the state couldn’t file any claim because of some issues.
