1. Standardised PPT on GST
Indirect Taxes Committee
The Institute of Chartered Accountants of India

2. Disclaimer and Copy right
This presentation has been prepared to provide a standard ‘user presentation’. The views expressed in this presentation are those of Speaker(s). The Institute of Chartered Accountants of India may not necessarily subscribe to the views expressed by the speaker(s). The information cited in this presentation has been drawn from various sources. While every efforts have been made to keep the information cited in this presentation error free, the Institute or any office do not take the responsibility for any typographical or clerical error which may have crept in while compiling the information provided in this presentation. Further, the information provided in this presentation are subject to the provisions contained under different acts and members are advised to refer to those relevant provision also. For clarifications write to us at
© The Institute of Chartered Accountants of India
This standardised PPT may be used by any person with due acknowledgement to the Indirect Taxes Committee of ICAI.
© Indirect Taxes Committee, ICAI

3. Compensation to States Act, 2017
© Indirect Taxes Committee, ICAI

4. Compensation to States Act :Important Headings
Short title, Extent and Commencement
Projected Growth Rate
Base year
Base Year Revenue
Calculation and release of compensation
Cess related provisions
© Indirect Taxes Committee, ICAI

5. Extent , Projected Growth Rate, Base Year
It extends to the whole of India
Projected Nominal Growth rate of revenue during transition period is 14% per annum
Base year for calculating Compensation would be FY ending
© Indirect Taxes Committee, ICAI

6. Definitions
“Central Tax” means the central goods and services tax levied and collected under the Central Goods and Services Tax Act.
“Central Goods and Services Tax Act” means the Central Goods and Services Tax Act, 2017.
“Cess” means the goods and services tax compensation cess levied under Section-8.
“Compensation” means an amount, in the form of goods and services tax compensation, as determined under section-7.
“Council” means the Goods and Services Tax Council constituted under the provisions of article 279A of the Constitution.
© Indirect Taxes Committee, ICAI

7. Definitions
“Fund” means the Goods and Services Tax Compensation Fund referred to in Section-10.
“input tax” in relation to a taxable person, means,––
cess charged on any supply of goods or services or both made to him;
cess charged on import of goods and includes the cess payable on reverse charge basis.
“Integrated Goods and Services Tax Act” means the Integrated Goods and Services Tax Act, 2017.
“Integrated tax” means the integrated goods and services tax levied and collected under the Integrated Goods and Services Tax Act.
© Indirect Taxes Committee, ICAI

8. Definitions
“Prescribed” means prescribed by rules made, on the recommendations of the Council, under this Act;
“projected growth rate” means the rate of growth projected for the transition period as per Section-3.
“Schedule” means the Schedule appended to this Act;
“State” means,––
for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under the Central Goods and Services Tax Act; and
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;
© Indirect Taxes Committee, ICAI

9. Definitions
“State tax” means the State goods and services tax levied and collected under the respective State Goods and Services Tax Act;
“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;
“Taxable supply’’ means a supply of goods or services or both which is chargeable to the cess under this Act;
“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;
© Indirect Taxes Committee, ICAI

10. Definitions
“Transition period” means a period of five years from the transition date; and
“Union Territories Goods and Services Tax Act” means the Union Territories Goods and Services Tax Act,
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
© Indirect Taxes Committee, ICAI

11. Base Year revenue
Base year revenue shall include all the taxes which are subsumed in GST levied by the state and the local bodies during the base year.
Base year revenue shall not include any taxes levied on the sale or purchase of crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption.
Base year revenue shall be calculated on basis of figures of revenue collected and net of refunds.
In State of Jammu and Kashmir, the base year revenue shall include the amount of tax collected on sale of services by the said Government during the base year.
© Indirect Taxes Committee, ICAI

12. Base Year Revenue
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;
Tax levied under the Central Sales Tax Act, 1956, on the sale or purchase of items mentioned as above.;
Any cess imposed by the State Government on the sale or purchase of items mentioned as above.
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.
© Indirect Taxes Committee, ICAI

13. Base Year Revenue
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.
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.
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.
© Indirect Taxes Committee, ICAI

14. Base Year Revenue
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.
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.
© Indirect Taxes Committee, ICAI

15. Projected revenue calculation
Projected revenue shall be calculated by applying the projected growth rate over the base year revenue.
If the base year revenue for for a Concerned State is one hundred rupees then projected revenue of financial year will be 100 (1+14/100)3
© Indirect Taxes Committee, ICAI

16. Calculation and release of compensation
The compensation shall be payable during the transition period.
The compensation payable 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.
In case any excess amount has been released as compensation in any F.Y during the transition period, as per the audited figures , the excess amount shall be adjusted against the compensation amount payable in the subsequent financial year.
© Indirect Taxes Committee, ICAI

17. Hundred and First
Hundred and First
74 of 1956.
74 of 1956.
74 of 1956.
74 of 1956. 40 35 15 45 30 25 40 20 25 30 35 20 15 10 45 10 5 5 5 5
erstwhile entry 55 of List-II (State List) of the Seventh Schedule to the Constitution;
erstwhile entry 55 of List-II (State List) of the Seventh Schedule to the Constitution;
prior to the commencement of the provisions of the Constitution (One Hundred and First
Amendment) Act, 2016:
Act notified under sub-section (
List-II (State List) of the Seventh Schedule to the Constitution;
the Constitution;
collected and retained by the concerned State Government under the erstwhile article 268 of
which are subsumed into goods and services tax, namely:––
that State, namely:—
under the following taxes shall not be included in the calculation of the base year revenue for
Amendment) Act, 2016:
prior to the commencement of the provisions of the Constitution (One Hundred and First
as the base year.
year during the transition period, the financial year ending 31st March, 2016, shall be taken
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.
transition period shall be fourteen per cent. per annum.
Act notified under sub-section (
62 of List-II of the Seventh Schedule to the Constitution by the State Government under any
the Seventh Schedule to the Constitution;
the Constitution;
collected and retained by the concerned State Government under the erstwhile article 268 of
under the erstwhile entry 52 of List-II (State List) of the Seventh Schedule to the Constitution;
other tax levied by the concerned State under the erstwhile entry 54 of List-II (State List) of
under the following taxes shall not be included in the calculation of the base year revenue for
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,
gambling or any other tax levied by the concerned State under the erstwhile entry 62 of
which are subsumed into goods and services tax, namely:––
as per section 5 is one hundred rupees, then the projected revenue for financial year
shall be as follows—
have the meanings respectively assigned to them in those Acts.
Central Goods and Services Tax Act and the Integrated Goods and Services Tax Act shall
projected growth rate over the base year revenue of that State.
prescribed.
transition period shall be fourteen per cent. per annum. (
be included in the total base year revenue of the State, subject to such conditions as may be
transition period.
at the end of every two months period, and shall be finally calculated for every financial year
to any State shall be calculated in the following manne
Act, 2017.
in the Official Gazette, appoint.
payable to such State in the subsequent financial year.
collected, the excess amount so released shall be adjusted against the compensation amount
after the receipt of final revenue figures, as audited by the Comptroller and Auditor-General
of India:
in any financial year during the transition period, as per the audited figures of revenue
audited by the Comptroller and Auditor-General of India.
on the basis of the figures of revenue collected and net of refunds given in that year, as
of refunds, with respect to the following taxes, imposed by the respective State or Union,
during the base year, on account of the taxes levied by the respective State or Union and net
revenue for a State shall be the sum of the revenue collected by the State and the local bodies
other tax levied by the concerned State under the erstwhile entry 54 of List-II (State List) of
the Seventh Schedule to the Constitution;
List-II (State List) of the Seventh Schedule to the Constitution;
gambling or any other tax levied by the concerned State under the erstwhile entry 62 of
under the erstwhile entry 52 of List-II (State List) of the Seventh Schedule to the Constitution;
the amount of tax collected on sale of services by the said State Government during the base
year.
notified.
as the base year.
year during the transition period, the financial year ending 31st March, 2016, shall be taken
specific taxes are being subsumed into the goods and services tax shall be such as may be
year revenue of the State, subject to such conditions as may be prescribed.
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 (
that State, namely:—
62 of List-II of the Seventh Schedule to the Constitution by the State Government under any
respect to such specific taxes referred to in sub-section (
transition period.
collected, the excess amount so released shall be adjusted against the compensation amount
in the Official Gazette, appoint.
prescribed.
payable to such State in the subsequent financial year.
projected growth rate over the base year revenue of that State.
Act, 2017.
as per section 5 is one hundred rupees, then the projected revenue for financial year
specific taxes are being subsumed into the goods and services tax shall be such as may be (
notified.
shall be as follows—
the Constitution, the amount of revenue foregone on account of exemptions or remission
of India:
to any State shall be calculated in the following manne
on the basis of the figures of revenue collected and net of refunds given in that year, as
year.
given by the said State Governments to promote industrial investment in the State, with
be included in the total base year revenue of the State, subject to such conditions as may be
audited by the Comptroller and Auditor-General of India.
year revenue of the State, subject to such conditions as may be prescribed.
in any financial year during the transition period, as per the audited figures of revenue
after the receipt of final revenue figures, as audited by the Comptroller and Auditor-General
at the end of every two months period, and shall be finally calculated for every financial year
the amount of tax collected on sale of services by the said State Government during the base 3 3
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES)
) and (
) and (
to provide for compensation to the States for the loss of revenue arising on account of
to provide for compensation to the States for the loss of revenue arising on account of
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural (
gas, aviation turbine fuel and alcoholic liquor for human consumption; and (
Schedule to the Constitution, prior to coming into force of the provisions of the
Constitution (One Hundred and First Amendment) Act, 2016. (
any Act enacted under the erstwh 2
Provided that the revenue collected during the base year in a State, net of refunds, (
Tax Act, 2017; (
under the respective State Goods and Services Tax Act; (
compensation, as determined under section 7; (
Legislature for levy and collection of tax by the concerned State on supply of goods or
(State List) of the Seventh Schedule to the Constitution, prior to the coming into force (
services or both;
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
consumption;
known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human
of the provisions of the Constitution (One (
on the sale or purchase of petroleum crude, high speed diesel, motor spirit (commonly
gas, aviation turbine fuel and alcoholic liquor for human consumption;
Projected Revenue for ( 3 1 4 ( ( ( ( 6
Projected Revenue for 7 ( B
Provided that in case any excess amount has been released as compensation to a State
Provided that in case any excess amount has been released as compensation to a State
Illustration 5 ( ( ( 1
chargeable to the cess under this Act;
under the Central Goods and Services Tax Act; 6
Illustration ( B ( (
Goods and Services Tax Act, 2017. ( 7
State Goods and Services Tax Act of the concerned State comes into force; 2 (
section 8;
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
section 8;
period as per section 3;
gas, aviation turbine fuel and alcoholic liquor for human consumption; (
petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
compensation, as determined under section 7;
Goods and Services Tax Act, 2017.
consumption;
known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human
Tax Act, 2017; 5 (
(State List) of the Seventh Schedule to the Constitution, prior to the coming into force 4
Services Tax Act, 2017; 3
of the provisions of the Constitution (One
gas, aviation turbine fuel and alcoholic liquor for human consumption; and
Council, under this Act;
collected under the Integrated Goods and Services Tax Act;
section 10;
under the respective State Goods and Services Tax Act;
Services Tax Act, 2017;
Council, under this Act; (
period as per section 3; (
collected under the Integrated Goods and Services Tax Act;
Legislature for levy and collection of tax by the concerned State on supply of goods or
chargeable to the cess under this Act;
any Act enacted under the erstwh
State Goods and Services Tax Act of the concerned State comes into force;
provisions of article 279A of the Constitution;
Schedule to the Constitution, prior to coming into force of the provisions of the
services or both;
Constitution (One Hundred and First Amendment) Act, 2016.
Provided that the revenue collected during the base year in a State, net of refunds,
on the sale or purchase of petroleum crude, high speed diesel, motor spirit (commonly (
under the Central Goods and Services Tax Act; ( (
section 10; (
provisions of article 279A of the Constitution; ( ( ( f 5 g 3 3 6 e 2 d d 3 2 e 2 2 f 2 2 3 6 c g c b 5 b
) “State Goods and Services Tax Act” means the law to be made by the State ( o n
) The words and expressions used and not defined in this Act but defined in the h (
) “State tax” means the State goods and services tax levied and collected
reverse charge basis;
) “Integrated Goods and Services Tax Act” means the Integrated Goods and ( (
) “integrated tax” means the integrated goods and services tax levied and j i ( ( ( p l
) “taxable supply’’ means a supply of goods or services or both which is ( ii
the Central Goods and Services Tax Act; and
) “Schedule” means the Schedule appended to this Act;
) for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under (
) “State” means,–– ( ( m
) for the purposes of sections 8, 9, 10, 11, 12, 13 and 14 the States as ( i k ( s
as defined under the Union Territories Goods and Services Tax Act;
) “Union Territories Goods and Services Tax Act” means the Union Territories
) “transition period” means a period of five years from the transition date; and r
) “transition date” shall mean, in respect of any State, the date on which the q
) “projected growth rate” means the rate of growth projected for the transition (
) The total compensation payable for any financial year during the transition period
defined under the Central Goods and Services Tax Act and the Union territories
) “prescribed” means prescribed by rules made, on the recommendations of the —
) The Acts of the Central Government and State Governments under which the ), 4
) any cess or surcharge or fee leviable under entry 66 read with entries 52, 54, 55 and 4 ( 1
), shall be included in the total base
) any taxes levied under any Act enacted under the erstwhile entry 54 of List-II a
) The base year revenue shall be calculated as per sub-sections ( 1
) and ( 4 )
) cess charged on import of goods and includes the cess payable on
) the duties of excise on medicinal and toilet preparations levied by the Union but 3
), ( 2
), (
Amendment) Act, 2016, (
) of clause (4) of article 279A of
revenue.
Base year
Base year. g
) In respect of the States mentioned in sub-clause ( 2 4 3
growth rate.
Projected c (
) tax levied under the Central Sales Tax Act, 1956, on the sale or purchase of b
) any cess imposed by the State Government on the sale or purchase of (
ile entry 62 of List-II (State List) of the Seventh
) the entertainment tax levied by the State but collected by local bodies, under d
) the taxes on advertisement or any other tax levied by the concerned State under the
) In respect of any State, if any part of revenues mentioned in sub-sections ( 1
. (
. For the purpose of calculating the compensation amount payable in any financial 1
) Subject to the provision of sub-sections ( 2
), ( 3
. (
), (
) The compensation under this Act shall be payable to any State during the
. The projected nominal growth rate of revenue subsumed for a State during the 20
) The compensation payable to a State shall be provisionally calculated and released 15 10 25 30 3 40 35 4
), (
) the entry tax, octroi, local body tax or any other tax levied by the concerned State
) the central sales tax levied under the Central Sales Tax Act, 1956;
) the value added tax, sales tax, purchase tax, tax collected on works contract, or any a ),
) the taxes on luxuries, including taxes on entertainments, amusements, betting and 1
), ( 2 4
) are not credited in the Consolidated Fund of the respective State, the same shall
), the base year 6
) and ( 5 3
(1+14/100)
. The projected revenue for any year in a State shall be calculated by applying the
) In respect of the State of Jammu and Kashmir, the base year revenue shall include
If the base year revenue for for a concerned State, calculated 5
) The total compensation payable for any financial year during the transition period
) 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 ii (
) for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under
the Central Goods and Services Tax Act; and
as defined under the Union Territories Goods and Services Tax Act; (
) “State Goods and Services Tax Act” means the law to be made by the State ( o ( n
) “State tax” means the State goods and services tax levied and collected i (
) “prescribed” means prescribed by rules made, on the recommendations of the ( j ( i
) “integrated tax” means the integrated goods and services tax levied and k
) “projected growth rate” means the rate of growth projected for the transition m
) “State” means,–– (
) “Schedule” means the Schedule appended to this Act; ( l p
) “taxable supply’’ means a supply of goods or services or both which is
. For the purpose of calculating the compensation amount payable in any financial
. (
. The projected nominal growth rate of revenue subsumed for a State during the 3 35 40 1
) Subject to the provision of sub-sections ( 4
), (
), ( 3 2
), ( 30 25 r
) “transition period” means a period of five years from the transition date; and (
) “transition date” shall mean, in respect of any State, the date on which the ( q ( s 15 20 10 5
) “Union Territories Goods and Services Tax Act” means the Union Territories
) The words and expressions used and not defined in this Act but defined in the (
) “Integrated Goods and Services Tax Act” means the Integrated Goods and ( a
) In this Act, unless the context otherwise requires,— 1
) It shall come into force on such date as the Central Government may, by notification
. (
) “central tax” means the central goods and services tax levied and collected
Definitions.
INTRODUCED IN BE O
Bill No. 60 of 2017 T
) It extends to the whole of India.
) This Act may be called the Goods and Services Tax (Compensation to States)
BILL, 2017 A
commencement.
extent and 1
Short title,
BILL
implementation of the goods and services tax in pursuance of the provisions of
. ( 1
it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:— E
the Constitution (One Hundred and First Amendment) Act,
2016. L OK
) “input tax” in relation to a taxable person, means,–– ( g ( f
) “Fund” means the Goods and Services Tax Compensation Fund referred to in i
) cess charged on any supply of goods or services or both made to him; ( h
reverse charge basis;
) cess charged on import of goods and includes the cess payable on ( ii (
) “Council” means the Goods and Services Tax Council constituted under the b
) “Central Goods and Services Tax Act” means the Central Goods and Services ( 2 S
ABHA ( c ( e
) “compensation” means an amount, in the form of goods and services tax d
) “cess” means the goods and services tax compensation cess levied under ( ii 5
) It shall come into force on such date as the Central Government may, by notification
. (
) It extends to the whole of India.
) This Act may be called the Goods and Services Tax (Compensation to States)
. ( 1 1
) In this Act, unless the context otherwise requires,—
Bill No. 60 of 2017 T
Definitions.
) “central tax” means the central goods and services tax levied and collected ( a
it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:— E 1
Short title,
) The compensation payable to a State shall be provisionally calculated and released
) The compensation under this Act shall be payable to any State during the
. ( 1
extent and
commencement.
the Constitution (One Hundred and First Amendment) Act,
2016.
implementation of the goods and services tax in pursuance of the provisions of
BILL
BILL, 2017 A O BE ( f
) “Council” means the Goods and Services Tax Council constituted under the e
) “compensation” means an amount, in the form of goods and services tax (
) “Fund” means the Goods and Services Tax Compensation Fund referred to in (
) cess charged on any supply of goods or services or both made to him; ( i ( g
) “input tax” in relation to a taxable person, means,–– d ( S
ABHA OK L
INTRODUCED IN 2 ( c
) “cess” means the goods and services tax compensation cess levied under (
) “Central Goods and Services Tax Act” means the Central Goods and Services b
) and ( 3 c
) any cess imposed by the State Government on the sale or purchase of (
) tax levied under the Central Sales Tax Act, 1956, on the sale or purchase of ( b ( d
Base year.
Base year
growth rate.
Projected
) the entertainment tax levied by the State but collected by local bodies, under
ile entry 62 of List-II (State List) of the Seventh
Amendment) Act, 2016,
) any taxes levied under any Act enacted under the erstwhile entry 54 of List-II
) the central sales tax levied under the Central Sales Tax Act, 1956;
) the entry tax, octroi, local body tax or any other tax levied by the concerned State
) the value added tax, sales tax, purchase tax, tax collected on works contract, or any a 6
), the base year
) the taxes on luxuries, including taxes on entertainments, amusements, betting and
) the taxes on advertisement or any other tax levied by the concerned State under the ( a ), 4
) the duties of excise on medicinal and toilet preparations levied by the Union but
) any cess or surcharge or fee leviable under entry 66 read with entries 52, 54, 55 and
(1+14/100)
revenue.
) In respect of any State, if any part of revenues mentioned in sub-sections ( 1 ) 4 4
) and (
), ( 2 —
If the base year revenue for for a concerned State, calculated
. The projected revenue for any year in a State shall be calculated by applying the
) are not credited in the Consolidated Fund of the respective State, the same shall ), 4
), ( 3 g 2
) In respect of the States mentioned in sub-clause ( 3 2
) In respect of the State of Jammu and Kashmir, the base year revenue shall include 1
) of clause (4) of article 279A of 1
), (
), shall be included in the total base
) The base year revenue shall be calculated as per sub-sections (
) The Acts of the Central Government and State Governments under which the 4
The total compensation payable for any financial year during the transition period
1) Calculate:
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.
the actual revenue collected by a State in any financial year during the transition period shall be the actual revenue from State tax collected by the State net of refunds, the integrated goods and services tax apportioned to that State and any collection of taxes on account of the taxes levied by the respective State.
© Indirect Taxes Committee, ICAI

18. Compensation
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 .
2) 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 previous year, this amount shall be refunded by State Government to Central Government and such shall be credited to Fund in such manner as may be prescribe.
© Indirect Taxes Committee, ICAI

19. Levy and collection of cess
There shall be levied a cess on such intra-state supplies of goods and services or both and such shall be collected in such manner as may be prescribe, on recommendation of the council, for purposes of providing compensation to the state for loss of revenue arising on account of implementation of goods and service tax, for period of Five years.
No such cess shall be leviable on supplies made by a taxable person who has decided to opt for composition levy under sec 10 of Central Goods and Services Tax Act.
Where the cess on goods imported into India shall be levied and collected at the point when duties of customs are levied on the said goods on value determined under Custom Tariff Act.
© Indirect Taxes Committee, ICAI

20. Returns, Payments and Refunds
Every taxable person, making a taxable supply of goods or services or both, shall:
pay the amount of cess;
furnish such returns in such forms, along with the returns to be filed under Central Goods and Services Tax Act; and
apply for refunds of such cess paid in such form as may be prescribed.
© Indirect Taxes Committee, ICAI

21. Crediting proceeds of cess to Fund
The proceeds of the cess leviable and such other amounts as may be recommended by the Council, shall be credited to a non-lapsable Fund known as the Goods and Services Tax Compensation Fund, which shall form part of the public account of India and shall be utilized for purposes specified in the said section.
All amounts payable to the States shall be paid out of the Fund.
Fifty per cent. of the amount remaining unutilized in the Fund at the end of the transition period shall be transferred to the Consolidated Fund of India as the share of Centre, and the balance fifty per cent. shall be distributed amongst the States in the ratio of their total revenues from the State tax or the Union territory goods and services tax, as the case may be, in the last year of the transition period.
Indirect Taxes Committee, ICAI

22. Crediting proceeds of cess to Fund
The accounts relating to Fund shall be audited by the Comptroller and Auditor- General of India or any person appointed by him at such intervals as may be specified by him and any expenditure in connection with such audit shall be payable by the Central Government to the Comptroller and Auditor-General of India.
The accounts of the Fund with the audit report thereon shall be laid before each House of Parliament.
© Indirect Taxes Committee, ICAI

23. Other Provisions related to cess
The provisions of the Central Goods and Services Tax Act, and the rules made thereunder, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, as far as may be, mutatis mutandis, apply, in relation to the levy and collection of the cess leviable under section 8 on the intra-State supply of goods and services, as they apply in relation to the levy and collection of central tax on such intra-State supplies under the said Act or the rules made thereunder.
© Indirect Taxes Committee, ICAI

24. Other provisions related to cess
The provisions of the Integrated Goods and Services Tax Act, and the rules made there under, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, mutatis mutandis, apply in relation to the levy and collection of the cess leviable under section 8 on the inter-State supply of goods and services, as they apply in relation to the levy and collection of integrated tax on such inter-State supplies under the said Act or the rules made there under: Provided that the input tax credit in respect of cess on supply of goods and services leviable under section shall be utilized only towards payment of said cess on supply of goods and services leviable under the said section.
© Indirect Taxes Committee, ICAI

25. Power to make rules
(1) The Central Government shall, on the recommendations of the Council, by notification in the Official Gazette, make rules for carrying out the provisions of this Act.
© Indirect Taxes Committee, ICAI

26. Power to remove difficulties
If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, on the recommendations of the Council, by order published in the Official Gazette, make such provisions, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for removing the difficulty. Provided that no order shall be made under this section after the expiry of three years from the commencement of this Act.
© Indirect Taxes Committee, ICAI

27. Summary and Important points under Compensation to states bill
Computation of loss arising to states
Payment of compensation
Levy of cess
Exclusion from levy of cess for composition taxable person
Levy on Imports
Rates of cess as per schedule.
Cess on services
Input Tax Credit
© Indirect Taxes Committee, ICAI

28. Summary and Important points under Compensation to states bill
9) Valuation same as CGST/IGST and Customs valuation rules for import.
Entries in schedule for levy of cess suggests that all Inter state and Intra state supplies are exposed to levy of cess.
Undistributed cess 50% to consolidated fund of India and 50% to the states in proportion of revenue in the last transition year.
Five year limit for imposition of cess is not indelible as provision says five years or for such period as may be prescribed.
© Indirect Taxes Committee, ICAI

29. Thank You For any Clarification, Please Contact
Indirect Taxes Committee of ICAI
Website: