Government plans new law to compensate states for loss from GST, if any
This legal ring fencing could help build consensus on GST rates when the issue is taken up next month, officials told the media.
"Compensation mechanism will be given a legal backing," a senior government official confirming some deliberations on the issue told
Another law that will be a guideline for provisions of a statutory framework is also being formed. GST is likely to get operational from April next year and would replace all indirect taxes on goods and services levied by central and state governments.
While the consensus has been passed in the parliament, a few states including DMK run
AdvertisementThe base year for GST compensation is fixed at FY16 but other details like what would be the percentage increase every year over the five year period are to be worked out.
This new law assuring compensation for the states in case of loss would help central government to keep a lower GST rate as compared to 20% demanded by many states.
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