Goods and Service Tax (Compensation to States) | GST Acts, FAQs and Updates PDF Download

 Page 1


Short title,
extent and
commencement.
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
ACT, 2017
NO. 15 OF  2017
[12th  April, 2017.]
An Act 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 the
provisions of the Constitution (One Hundred and First Amendment) Act,
2016.
BE it enacted by Parliament in the Sixty-eighth Y ear of the Republic of India as follows:—
1. (1) This Act may be called the Goods and Services Tax (Compensation to States)
Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.
2. (1) In this Act, unless the context otherwise requires,—
(a) “central tax” means the central goods and services tax levied and collected
under the Central Goods and Services Tax Act;
Definitions.
jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—17
vlk/kkj.k
EXTRAORDINARY
Hkkx  II — [k.M 1
PART II — Section 1
izkf/kdkj ls izdkf'kr
PUBLISHED  BY  AUTHORITY
lañ 15] ubZ fnYyh] cq/kokj] vizSy 12] 2017@pS= 22] 1939 ¼'kd½
No. 15] NEW DELHI, WEDNESDAY, APRIL 12, 2017/CHAITRA 22, 1939 (SAKA)
bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA
Separate paging is given to this Part in order that it may be filed as a separate compilation.
REGISTERED NO. DL—(N)04/0007/2003—17
MINISTRY OF LA W AND JUSTICE
(Legislative Department)
New Delhi, the 12th April, 2017/Chaitra 22, 1939  (Saka)
The following Act of  Parliament received the assent of the President on the
12th April, 2017, and is hereby published for general information:—
Page 2


Short title,
extent and
commencement.
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
ACT, 2017
NO. 15 OF  2017
[12th  April, 2017.]
An Act 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 the
provisions of the Constitution (One Hundred and First Amendment) Act,
2016.
BE it enacted by Parliament in the Sixty-eighth Y ear of the Republic of India as follows:—
1. (1) This Act may be called the Goods and Services Tax (Compensation to States)
Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.
2. (1) In this Act, unless the context otherwise requires,—
(a) “central tax” means the central goods and services tax levied and collected
under the Central Goods and Services Tax Act;
Definitions.
jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—17
vlk/kkj.k
EXTRAORDINARY
Hkkx  II — [k.M 1
PART II — Section 1
izkf/kdkj ls izdkf'kr
PUBLISHED  BY  AUTHORITY
lañ 15] ubZ fnYyh] cq/kokj] vizSy 12] 2017@pS= 22] 1939 ¼'kd½
No. 15] NEW DELHI, WEDNESDAY, APRIL 12, 2017/CHAITRA 22, 1939 (SAKA)
bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA
Separate paging is given to this Part in order that it may be filed as a separate compilation.
REGISTERED NO. DL—(N)04/0007/2003—17
MINISTRY OF LA W AND JUSTICE
(Legislative Department)
New Delhi, the 12th April, 2017/Chaitra 22, 1939  (Saka)
The following Act of  Parliament received the assent of the President on the
12th April, 2017, and is hereby published for general information:—
2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
(b) “Central Goods and Services Tax Act” means the Central Goods and Services
T ax Act, 2017;
(c) “cess” means the goods and services tax compensation cess levied under
section 8;
(d) “compensation” means an amount, in the form of goods and services tax
compensation, as determined under section 7;
(e) “Council” means the Goods and Services Tax Council constituted under the
provisions of article 279A of the Constitution;
(f) “Fund” means the Goods and Services Tax Compensation Fund referred to in
section 10;
(g) “input tax” in relation to a taxable person, means,––
(i) cess charged on any supply of goods or services or both made to him;
(ii) cess charged on import of goods and includes the cess payable on
reverse charge basis;
(h) “Integrated Goods and Services Tax Act” means the Integrated Goods and
Services T ax Act, 2017;
(i) “integrated tax” means the integrated goods and services tax levied and
collected under the Integrated Goods and Services Tax Act;
(j) “prescribed” means prescribed by rules made, on the recommendations of the
Council, under this Act;
(k) “projected growth rate” means the rate of growth projected for the transition
period as per section 3;
(l) “Schedule” means the Schedule appended to this Act;
(m) “State” means,––
(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
(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) “State tax” means the State goods and services tax levied and collected
under the respective State Goods and Services Tax Act;
(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;
(p) “taxable supply’’ means a supply of goods or services or both which is
chargeable to the cess under this Act;
(q) “transition date” shall mean, in respect of any State, the date on which the
State Goods and Services Tax Act of the concerned State comes into force;
(r) “transition period” means a period of five years from the transition date; and
(s) “Union Territories Goods and Services Tax Act” means the Union Territories
Goods and Services Tax Act,  2017.
(2) The words and expressions used and not defined in this Act but defined in the
Central Goods and Services Tax Act and the Integrated Goods and Services Tax Act shall
have the meanings respectively assigned to them in those Acts.
Page 3


Short title,
extent and
commencement.
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
ACT, 2017
NO. 15 OF  2017
[12th  April, 2017.]
An Act 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 the
provisions of the Constitution (One Hundred and First Amendment) Act,
2016.
BE it enacted by Parliament in the Sixty-eighth Y ear of the Republic of India as follows:—
1. (1) This Act may be called the Goods and Services Tax (Compensation to States)
Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.
2. (1) In this Act, unless the context otherwise requires,—
(a) “central tax” means the central goods and services tax levied and collected
under the Central Goods and Services Tax Act;
Definitions.
jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—17
vlk/kkj.k
EXTRAORDINARY
Hkkx  II — [k.M 1
PART II — Section 1
izkf/kdkj ls izdkf'kr
PUBLISHED  BY  AUTHORITY
lañ 15] ubZ fnYyh] cq/kokj] vizSy 12] 2017@pS= 22] 1939 ¼'kd½
No. 15] NEW DELHI, WEDNESDAY, APRIL 12, 2017/CHAITRA 22, 1939 (SAKA)
bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA
Separate paging is given to this Part in order that it may be filed as a separate compilation.
REGISTERED NO. DL—(N)04/0007/2003—17
MINISTRY OF LA W AND JUSTICE
(Legislative Department)
New Delhi, the 12th April, 2017/Chaitra 22, 1939  (Saka)
The following Act of  Parliament received the assent of the President on the
12th April, 2017, and is hereby published for general information:—
2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
(b) “Central Goods and Services Tax Act” means the Central Goods and Services
T ax Act, 2017;
(c) “cess” means the goods and services tax compensation cess levied under
section 8;
(d) “compensation” means an amount, in the form of goods and services tax
compensation, as determined under section 7;
(e) “Council” means the Goods and Services Tax Council constituted under the
provisions of article 279A of the Constitution;
(f) “Fund” means the Goods and Services Tax Compensation Fund referred to in
section 10;
(g) “input tax” in relation to a taxable person, means,––
(i) cess charged on any supply of goods or services or both made to him;
(ii) cess charged on import of goods and includes the cess payable on
reverse charge basis;
(h) “Integrated Goods and Services Tax Act” means the Integrated Goods and
Services T ax Act, 2017;
(i) “integrated tax” means the integrated goods and services tax levied and
collected under the Integrated Goods and Services Tax Act;
(j) “prescribed” means prescribed by rules made, on the recommendations of the
Council, under this Act;
(k) “projected growth rate” means the rate of growth projected for the transition
period as per section 3;
(l) “Schedule” means the Schedule appended to this Act;
(m) “State” means,––
(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
(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) “State tax” means the State goods and services tax levied and collected
under the respective State Goods and Services Tax Act;
(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;
(p) “taxable supply’’ means a supply of goods or services or both which is
chargeable to the cess under this Act;
(q) “transition date” shall mean, in respect of any State, the date on which the
State Goods and Services Tax Act of the concerned State comes into force;
(r) “transition period” means a period of five years from the transition date; and
(s) “Union Territories Goods and Services Tax Act” means the Union Territories
Goods and Services Tax Act,  2017.
(2) The words and expressions used and not defined in this Act but defined in the
Central Goods and Services Tax Act and the Integrated Goods and Services Tax Act shall
have the meanings respectively assigned to them in those Acts.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 3
3. The projected nominal growth rate of revenue subsumed for a State during the
transition period shall be fourteen per cent. per annum.
4. For the purpose of calculating the compensation amount payable in any financial
year during the transition period, the financial year ending 31st March, 2016, shall be taken as
the base year.
5. (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:––
 (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;
(b) the central sales tax levied under the Central Sales Tax Act, 1956;
(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;
(d) the taxes on luxuries, including taxes on entertainments, amusements, betting
and gambling or any other tax levied by the concerned State under the erstwhile entry
62  of  List-II (State List) of the Seventh Schedule to the onstitution;
(e) the 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;
(f) the duties of excise on medicinal and toilet preparations levied by the Union
but collected and retained by the concerned State Government under the erstwhile
article 268 of the Constitution;
(g) any cess or surcharge or fee leviable under entry 66 read with entries 52, 54,
55 and 62 of List-II of the Seventh Schedule to the Constitution by the State Government
under any Act notified under sub-section (4),
prior to the commencement of the provisions of the Constitution (One Hundred and First
Amendment) Act, 2016:
Provided that the revenue collected during the base year in a State, net of refunds,
under the following taxes shall not be included in the calculation of the base year revenue for
that State, namely:—
(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;
(b) tax levied under the Central Sales Tax Act, 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;
(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 turbine fuel and alcoholic liquor for human consumption; and
(d) the entertainment tax levied by the State but collected 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 coming into force of the provisions of the
Constitution (One Hundred and First Amendment) Act, 2016.
Projected
growth rate.
Base year.
Base year
 revenue.
74 of 1956.
74 of 1956.
Page 4


Short title,
extent and
commencement.
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
ACT, 2017
NO. 15 OF  2017
[12th  April, 2017.]
An Act 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 the
provisions of the Constitution (One Hundred and First Amendment) Act,
2016.
BE it enacted by Parliament in the Sixty-eighth Y ear of the Republic of India as follows:—
1. (1) This Act may be called the Goods and Services Tax (Compensation to States)
Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.
2. (1) In this Act, unless the context otherwise requires,—
(a) “central tax” means the central goods and services tax levied and collected
under the Central Goods and Services Tax Act;
Definitions.
jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—17
vlk/kkj.k
EXTRAORDINARY
Hkkx  II — [k.M 1
PART II — Section 1
izkf/kdkj ls izdkf'kr
PUBLISHED  BY  AUTHORITY
lañ 15] ubZ fnYyh] cq/kokj] vizSy 12] 2017@pS= 22] 1939 ¼'kd½
No. 15] NEW DELHI, WEDNESDAY, APRIL 12, 2017/CHAITRA 22, 1939 (SAKA)
bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA
Separate paging is given to this Part in order that it may be filed as a separate compilation.
REGISTERED NO. DL—(N)04/0007/2003—17
MINISTRY OF LA W AND JUSTICE
(Legislative Department)
New Delhi, the 12th April, 2017/Chaitra 22, 1939  (Saka)
The following Act of  Parliament received the assent of the President on the
12th April, 2017, and is hereby published for general information:—
2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
(b) “Central Goods and Services Tax Act” means the Central Goods and Services
T ax Act, 2017;
(c) “cess” means the goods and services tax compensation cess levied under
section 8;
(d) “compensation” means an amount, in the form of goods and services tax
compensation, as determined under section 7;
(e) “Council” means the Goods and Services Tax Council constituted under the
provisions of article 279A of the Constitution;
(f) “Fund” means the Goods and Services Tax Compensation Fund referred to in
section 10;
(g) “input tax” in relation to a taxable person, means,––
(i) cess charged on any supply of goods or services or both made to him;
(ii) cess charged on import of goods and includes the cess payable on
reverse charge basis;
(h) “Integrated Goods and Services Tax Act” means the Integrated Goods and
Services T ax Act, 2017;
(i) “integrated tax” means the integrated goods and services tax levied and
collected under the Integrated Goods and Services Tax Act;
(j) “prescribed” means prescribed by rules made, on the recommendations of the
Council, under this Act;
(k) “projected growth rate” means the rate of growth projected for the transition
period as per section 3;
(l) “Schedule” means the Schedule appended to this Act;
(m) “State” means,––
(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
(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) “State tax” means the State goods and services tax levied and collected
under the respective State Goods and Services Tax Act;
(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;
(p) “taxable supply’’ means a supply of goods or services or both which is
chargeable to the cess under this Act;
(q) “transition date” shall mean, in respect of any State, the date on which the
State Goods and Services Tax Act of the concerned State comes into force;
(r) “transition period” means a period of five years from the transition date; and
(s) “Union Territories Goods and Services Tax Act” means the Union Territories
Goods and Services Tax Act,  2017.
(2) The words and expressions used and not defined in this Act but defined in the
Central Goods and Services Tax Act and the Integrated Goods and Services Tax Act shall
have the meanings respectively assigned to them in those Acts.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 3
3. The projected nominal growth rate of revenue subsumed for a State during the
transition period shall be fourteen per cent. per annum.
4. For the purpose of calculating the compensation amount payable in any financial
year during the transition period, the financial year ending 31st March, 2016, shall be taken as
the base year.
5. (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:––
 (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;
(b) the central sales tax levied under the Central Sales Tax Act, 1956;
(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;
(d) the taxes on luxuries, including taxes on entertainments, amusements, betting
and gambling or any other tax levied by the concerned State under the erstwhile entry
62  of  List-II (State List) of the Seventh Schedule to the onstitution;
(e) the 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;
(f) the duties of excise on medicinal and toilet preparations levied by the Union
but collected and retained by the concerned State Government under the erstwhile
article 268 of the Constitution;
(g) any cess or surcharge or fee leviable under entry 66 read with entries 52, 54,
55 and 62 of List-II of the Seventh Schedule to the Constitution by the State Government
under any Act notified under sub-section (4),
prior to the commencement of the provisions of the Constitution (One Hundred and First
Amendment) Act, 2016:
Provided that the revenue collected during the base year in a State, net of refunds,
under the following taxes shall not be included in the calculation of the base year revenue for
that State, namely:—
(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;
(b) tax levied under the Central Sales Tax Act, 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;
(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 turbine fuel and alcoholic liquor for human consumption; and
(d) the entertainment tax levied by the State but collected 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 coming into force of the provisions of the
Constitution (One Hundred and First Amendment) Act, 2016.
Projected
growth rate.
Base year.
Base year
 revenue.
74 of 1956.
74 of 1956.
4 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
 (2) In respect of the State of Jammu and Kashmir, the base year revenue shall include
the amount of tax collected on sale of services by the said State Government during the base
year.
 (3) In respect of the States mentioned in sub-clause (g) of clause (4) of article 279A of
the Constitution, the amount of revenue foregone on account of exemptions or remission
given by the said State Governments to promote industrial investment in the State, with
respect to such specific taxes referred to in sub-section (1), shall be included in the total base
year revenue of the State, subject to such conditions as may be prescribed.
 (4) The Acts 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.
(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.
(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.
6. 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 one hundred rupees, then the projected revenue for financial year
2018-19 shall be as follows—
Projected Revenue for 2018-19=100 (1+14/100)
3
7. (1) The compensation under this Act shall be payable to any State during the
transition period.
(2) The compensation payable to a State shall be provisionally calculated and released
at the end of every two months period, and shall be finally calculated for every financial year
after the receipt of final revenue figures, as audited by the Comptroller and Auditor-General
of  India:
Provided that in case any excess amount has been released as compensation to a State
in any financial year during the transition period, as per the audited figures of revenue
collected, the excess amount so released shall be adjusted against the compensation amount
payable to such State in the subsequent financial year.
(3) The total compensation payable for any financial year during the transition period
to any State shall be calculated in the following manner, namely:––
(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;
(b) the actual revenue collected by a State in any financial year during the
transition period shall be—
(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;
(ii) the integrated goods and services tax apportioned to that State;
and
 (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 refund of such taxes,
as certified by the Comptroller and Auditor-General of India;
Projected
revenue for
any year.
Calculation
and release of
compensation.
Page 5


Short title,
extent and
commencement.
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
ACT, 2017
NO. 15 OF  2017
[12th  April, 2017.]
An Act 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 the
provisions of the Constitution (One Hundred and First Amendment) Act,
2016.
BE it enacted by Parliament in the Sixty-eighth Y ear of the Republic of India as follows:—
1. (1) This Act may be called the Goods and Services Tax (Compensation to States)
Act, 2017.
(2) It extends to the whole of India.
(3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.
2. (1) In this Act, unless the context otherwise requires,—
(a) “central tax” means the central goods and services tax levied and collected
under the Central Goods and Services Tax Act;
Definitions.
jftLVªh lañ Mhñ ,yñ—(,u)04@0007@2003—17
vlk/kkj.k
EXTRAORDINARY
Hkkx  II — [k.M 1
PART II — Section 1
izkf/kdkj ls izdkf'kr
PUBLISHED  BY  AUTHORITY
lañ 15] ubZ fnYyh] cq/kokj] vizSy 12] 2017@pS= 22] 1939 ¼'kd½
No. 15] NEW DELHI, WEDNESDAY, APRIL 12, 2017/CHAITRA 22, 1939 (SAKA)
bl Hkkx esa fHkUu i`"B la[;k nh tkrh gS ftlls fd ;g vyx ladyu ds :i esa j[kk tk ldsA
Separate paging is given to this Part in order that it may be filed as a separate compilation.
REGISTERED NO. DL—(N)04/0007/2003—17
MINISTRY OF LA W AND JUSTICE
(Legislative Department)
New Delhi, the 12th April, 2017/Chaitra 22, 1939  (Saka)
The following Act of  Parliament received the assent of the President on the
12th April, 2017, and is hereby published for general information:—
2 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
(b) “Central Goods and Services Tax Act” means the Central Goods and Services
T ax Act, 2017;
(c) “cess” means the goods and services tax compensation cess levied under
section 8;
(d) “compensation” means an amount, in the form of goods and services tax
compensation, as determined under section 7;
(e) “Council” means the Goods and Services Tax Council constituted under the
provisions of article 279A of the Constitution;
(f) “Fund” means the Goods and Services Tax Compensation Fund referred to in
section 10;
(g) “input tax” in relation to a taxable person, means,––
(i) cess charged on any supply of goods or services or both made to him;
(ii) cess charged on import of goods and includes the cess payable on
reverse charge basis;
(h) “Integrated Goods and Services Tax Act” means the Integrated Goods and
Services T ax Act, 2017;
(i) “integrated tax” means the integrated goods and services tax levied and
collected under the Integrated Goods and Services Tax Act;
(j) “prescribed” means prescribed by rules made, on the recommendations of the
Council, under this Act;
(k) “projected growth rate” means the rate of growth projected for the transition
period as per section 3;
(l) “Schedule” means the Schedule appended to this Act;
(m) “State” means,––
(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
(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) “State tax” means the State goods and services tax levied and collected
under the respective State Goods and Services Tax Act;
(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;
(p) “taxable supply’’ means a supply of goods or services or both which is
chargeable to the cess under this Act;
(q) “transition date” shall mean, in respect of any State, the date on which the
State Goods and Services Tax Act of the concerned State comes into force;
(r) “transition period” means a period of five years from the transition date; and
(s) “Union Territories Goods and Services Tax Act” means the Union Territories
Goods and Services Tax Act,  2017.
(2) The words and expressions used and not defined in this Act but defined in the
Central Goods and Services Tax Act and the Integrated Goods and Services Tax Act shall
have the meanings respectively assigned to them in those Acts.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 3
3. The projected nominal growth rate of revenue subsumed for a State during the
transition period shall be fourteen per cent. per annum.
4. For the purpose of calculating the compensation amount payable in any financial
year during the transition period, the financial year ending 31st March, 2016, shall be taken as
the base year.
5. (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:––
 (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;
(b) the central sales tax levied under the Central Sales Tax Act, 1956;
(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;
(d) the taxes on luxuries, including taxes on entertainments, amusements, betting
and gambling or any other tax levied by the concerned State under the erstwhile entry
62  of  List-II (State List) of the Seventh Schedule to the onstitution;
(e) the 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;
(f) the duties of excise on medicinal and toilet preparations levied by the Union
but collected and retained by the concerned State Government under the erstwhile
article 268 of the Constitution;
(g) any cess or surcharge or fee leviable under entry 66 read with entries 52, 54,
55 and 62 of List-II of the Seventh Schedule to the Constitution by the State Government
under any Act notified under sub-section (4),
prior to the commencement of the provisions of the Constitution (One Hundred and First
Amendment) Act, 2016:
Provided that the revenue collected during the base year in a State, net of refunds,
under the following taxes shall not be included in the calculation of the base year revenue for
that State, namely:—
(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;
(b) tax levied under the Central Sales Tax Act, 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;
(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 turbine fuel and alcoholic liquor for human consumption; and
(d) the entertainment tax levied by the State but collected 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 coming into force of the provisions of the
Constitution (One Hundred and First Amendment) Act, 2016.
Projected
growth rate.
Base year.
Base year
 revenue.
74 of 1956.
74 of 1956.
4 THE GAZETTE OF INDIA EXTRAORDINARY [PART II—
 (2) In respect of the State of Jammu and Kashmir, the base year revenue shall include
the amount of tax collected on sale of services by the said State Government during the base
year.
 (3) In respect of the States mentioned in sub-clause (g) of clause (4) of article 279A of
the Constitution, the amount of revenue foregone on account of exemptions or remission
given by the said State Governments to promote industrial investment in the State, with
respect to such specific taxes referred to in sub-section (1), shall be included in the total base
year revenue of the State, subject to such conditions as may be prescribed.
 (4) The Acts 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.
(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.
(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.
6. 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 one hundred rupees, then the projected revenue for financial year
2018-19 shall be as follows—
Projected Revenue for 2018-19=100 (1+14/100)
3
7. (1) The compensation under this Act shall be payable to any State during the
transition period.
(2) The compensation payable to a State shall be provisionally calculated and released
at the end of every two months period, and shall be finally calculated for every financial year
after the receipt of final revenue figures, as audited by the Comptroller and Auditor-General
of  India:
Provided that in case any excess amount has been released as compensation to a State
in any financial year during the transition period, as per the audited figures of revenue
collected, the excess amount so released shall be adjusted against the compensation amount
payable to such State in the subsequent financial year.
(3) The total compensation payable for any financial year during the transition period
to any State shall be calculated in the following manner, namely:––
(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;
(b) the actual revenue collected by a State in any financial year during the
transition period shall be—
(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;
(ii) the integrated goods and services tax apportioned to that State;
and
 (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 refund of such taxes,
as certified by the Comptroller and Auditor-General of India;
Projected
revenue for
any year.
Calculation
and release of
compensation.
SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 5
(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 referred to in clause (b).
(4) The loss of revenue at the end of every two months period in any year for a State
during the transition period shall be calculated, at the end of the said period, in the following
manner, namely:––
(a) the projected revenue that could have been earned by the State in absence of
the goods and services tax till the end of the relevant two months period of the
respective financial year shall be calculated on a pro-rata basis as a percentage of the
total projected revenue for any financial year during the transition period, calculated in
accordance with section 6.
Illustration.—If the projected revenue for any year calculated in accordance
with section 6 is one hundred rupees, for calculating the projected revenue that could
be earned till the end of the period of ten months for the purpose of this
sub-section shall be 100x(5/6)=Rs.83.33;
(b) the actual revenue collected by a State till the end of relevant two months
period in any financial year during the transition period shall be—
(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
T ax Act;
(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
(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;
(c) the provisional compensation payable to any State at the end of the relevant
two months 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 transition period.
(5) In case of any difference between the final compensation amount payable to a State
calculated in accordance with the provisions of sub-section (3) upon receipt of the audited
revenue figures from the Comptroller and Auditor-General of India, and the total provisional
compensation amount released to a State in the said financial year in accordance with the
provisions of sub-section (4), the same shall be adjusted against release of compensation to
the State in the subsequent financial year.
(6) Where no compensation is due to be released in any financial year, and in case any
excess amount has been released to a State in the previous year, this amount shall be
refunded by the State to the Central Government and such amount shall be credited to the
Fund in such manner as may be prescribed.
8. (1) There shall be levied a cess on such intra-State supplies of goods or services or
both, as provided for in section 9 of the Central Goods and 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:
Levy and
collection of
cess.