GST Council clears drafts of 3 enabling bills including compensation for states

 GST Council clears drafts of 3 enabling bills including compensation for states In a significant breakthrough, the Goods and Services Tax Council has cleared the model GST law --state GST or SGST and CGST or central GST in its 7th meet. State GST draft law needs to be approved by state legislatures while the CGST draft law needs to be approved by Parliament. Basic draft of Compensation

law was also approved. Compensation law has to be approved by Parliament.   The GST Compensation Bill will provide a legal backing to the Centre's accord to compensate the states to the full extent of 100% if their revenue growth rate falls below 14% in the first five years of GST roll out.   The base year for calculating revenue of a state has been decided as 2015-16.   But the council is yet to produce a solution to the tangled issues of dual control and cross empowerment.   GST Council will next meet on Jan 3-4 to discuss dual control which are related to the approval of the integrated GST law needed to fix indirect taxation for inter-state trade.  Finance Minister also said that the government is trying its best to implement GST from the 1st of April and that he'll also hold budget consultations with state finance ministers in the January 3-4 meeting. The GST Council has already decided on a 4-tier GST tax structure of 5, 12, 18 and 28 per cents.  Luxury items and demerit goods would be taxed at the highest rate and would also attract a cess to create a Rs 50,000 crore corpus for compensating states for loss of revenue. Indirect tax structure in India is highly complex with hidden costs for trade and industry.

The introduction of Goods and Services Tax (GST) would be a very significant step in the field of indirect tax reforms in India. 

The bill was passed by the Rajya Sabha on 3 August 2016, and the amended bill was passed by the Lok Sabha on 8 August 2016.