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Government compensates States/UTs for revenue deficit on implementation of GST

 As per Section 4 of the said Act, the financial year 2015-16 has been taken as the base year for calculating compensation amount payable to States for loss of revenue during the transition period


Government Press Release 10 Aug 2018, 06:22 PM
  • The projected nominal growth rate of revenue subsumed for a state during the transition period shall be 14% per annum. (Image Credit: Twitter)

The government has compensated to the States/UTs for the reported revenue deficit on account of implementation of Goods and Services Tax (GST). As per provisions in Section 7 of the GST (Compensation to States) Act, 2017 loss of revenue to the States on account of implementation of Goods and Services Tax shall be payable during transition period and compensation payable to a State shall be provisionally calculated and released at the end of every two months during transition period of 5 years.

 As per Section 4 of the said Act, the financial year 2015-16 has been taken as the base year for calculating compensation amount payable to States for loss of revenue during the transition period. The projected nominal growth rate of revenue subsumed for a state during the transition period shall be 14% per annum.

  As per section 7(c) of the said Act, the total compensation payable in any fiscal year shall be the difference between the projected revenue for any fiscal year and the actual revenue collected by a State. On this basis, the revenue loss due to the implementation of GST to the states for the month of July 2017 to March 2018 and April to May 2018 has been estimated to be Rs. 48178 crore (Annexure-I) and Rs. 3899 crore (Annexure-II) respectively and accordingly, States/UTs have been paid GST Compensation of Rs. 48178 crore for the period of July 2017 to March 2018 and Rs. 3899 crore for the period of April-May, 2018.


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