Thursday, February 23, 2017

Key Takeaways from 10th Meeting of GST Council: State Compensation Law Approved

The GST Council failed to approve all GST related Bills in its 10th meeting at Udaipur, Rajasthan and it has only finalised legally vetted State Compensation law. The following are the key takeaways of the meeting:

a) State Compensation Law Approved: The Council has approved the legally vetted Draft of State Compensation Law. According to 101st Constitution Amendment Act, 2016 the Centre will compensate State for first five years of GST implementation in case any loss revenue accrues to State on account of GST Implementation. The Draft Law provides that base year for calculation of compensation would be financial year 2016 and growth in revenue would be taken as 14 percent calculated on compounding basis. The Draft bill will now laid before the Cabinet and after approval of same it will be presented before the Parliament.

b) Central GST, State GST and Integrated GST: The Finance Minister said that there were some contentions issues pending on Model GST Laws. Some of them are as under:

1) Composition of Tribunal members and their eligibility

2) Exemptions during transition phase to Industry (E.g. Extension of time for return filling, etc.)

3) Classification of Works Contract as goods or Services

4) Definition of Agriculture, etc.

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