Section 1 in The Goods and Services Tax (Compensation to States) Act 2017

Title: Short title and commencement

Description: (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 date1 as the Central Government may, by notification in the Official Gazette, appoint. 1. 1st July, 2017 vide notification No. G.S.R. 700 (E) dated the 28 June, 2017, see Gazette of India, Extraordinary, Part II, sec. 3(i).

Title: Definitions

Description: (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; (b) “Central Goods and Services Tax Act” means the Central Goods and Services Tax Act, 2017 (12 of 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 Tax Act, 2017 (13 of 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 (14 of 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.

Title: Projected growth rate

Description: The projected nominal growth rate of revenue subsumed for a State during the transition period shall be fourteen per cent. per annum.

Title: Base year

Description: 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.

Title: Base year revenue

Description: (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 (74 of 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 Constitution; (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, 20; 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 (74 of 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. (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. *. Vide notification No. S.O. 3912(E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu and Kashmir and the Union territory of Ladakh.

The Goods and Services Tax Act Compensation to States2017