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Cabinet approves Bill replacing GST (Compensation to States) Ordinance

GST Cess

Reportedly, the Union Cabinet, on Friday approved a Bill replacing the Goods and Service Tax (Compensation to States) Ordinance. The Bill has been listed the bill for introduction in its Parliament business agenda for the next week.

The GST (Compensation to States) Bill 2017 aims to provide for compensation to the states for the loss of revenue arising on account of implementation of Goods and Service Tax Act, sources said.

The Bill provides for imposition of compensation cess on intra-state/ inter-state supplies of goods and services.

The 22nd meeting of the GST Council in August had recommended an increase of 10 per cent to 25 per cent in the maximum rate on certain type of motor vehicles with a view to restore tax revenue from the automobile industry that unintentionally got affected in the transition to the new indirect tax regime.

Following this, in September, the Government had promulgated ordinance enabling an increase in the goods and services tax (GST) cess on motor vehicles, including medium-sized cars, large cars and sports utility vehicles (SUVs), from 15% to 25%.

Article 123 of the Constitution mandates that the ordinance be approved by the Parliament within six weeks of reconvening. Accordingly, the finance ministry is now planning to replace the ordinance by the Goods and Service Tax (Compensation to States) Bill, 2017.

The government has listed the bill for introduction in its Parliament business agenda for the next week.

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