S.1 Short title, extent and commencement

       (1) This Act may be called the Goods and Services Tax (Compensation to States) Act, 2017.
       (2) It extends to the whole of India.
       (3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint.

S.2 Definitions

       (1) In this Act, unless the context otherwise requires,-
       (a) "central tax" means the central goods and services tax levied and collected under the Central Goods and Services Tax Act;
       (b) "Central Goods and Services Tax Act" means the Central Goods and Services Tax Act, 2017;
       (c) "cess" means the goods and services tax compensation cess levied under section 8;
       (d) "compensation" means an amount, in the form of goods and services tax compensation, as determined under section 7;
       (e) "Council" means the Goods and Services Tax Council constituted under the provisions of article 279A of the Constitution;
       (f) "Fund" means the Goods and Services Tax Compensation Fund r

S.3 Projected growth rate

The projected nominal growth rate of revenue subsumed for a State during the transition period shall be fourteen per cent. per annum.

S.4 Base year

For the purpose of calculating the compensation amount payable in any financial year during the transition period, the financial year ending 31st March, 2016, shall be taken as the base year.

S.5 Base year revenue

       (1) Subject to the provision of sub-sections (2), (3), (4), (5) and (6), the base year 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, which are subsumed into goods and services tax, namely:-
       (a) the value added tax, sales tax, purchase tax, tax collected on works contract, or any other tax levied by the concerned State under the erstwhile entry 54 of List-II (State List) of the Seventh Schedule to the Constitution;
       (b) the central sales tax levied under the Central Sales Tax Act, 1956;
       (c) the entry tax, octroi, local body tax or any other tax levied by the concer

S.6 Projected revenue for any year

       The projected revenue for any year in a State shall be calculated by applying the projected growth rate over the base year revenue of that State.
       Illustration.-If the base year revenue for 2015-16 for a concerned State, calculated as per section 5 is one hundred rupees, then the projected revenue for financial year 2018-19 shall be as follows-
Projected Revenue for2018-19=100 (1+14/100)3

S.7 Calculation and release of compensation

       (1) The compensation under this Act shall be payable to any State during the transition period.
       (2) The compensation payable to a State 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 of India:
       Provided that in case any excess amount has been released as compensation to a State in any financial year during the transition period, as per the audited figures of revenue collected, the excess amount so released shall be adjusted against the compensation amount payable to such State in the subsequent financial year.
       (3) The total compensation payable for any financial year during the transition period to any State

S.8 Levy and collection of cess

       - (1) There shall be levied a cess on such intra-State supplies of goods or services or Levy and both, as provided for in section 9 of the Central Goods and Services Tax Act, and such inter- collection of State supplies of goods or services or both as provided for in section 5 of the Integrated cess. Goods and Services Tax Act, and collected in such manner as may be prescribed, on the recommendations of the Council, for the purposes of providing compensation to the States for loss of revenue arising on account of implementation of the goods and services tax with effect from the date from which the provisions of the Central Goods and Services Tax Act is brought into force, for a period of five years or for such period as may be prescribed on the recommendations of the Council:
       Provided that no such cess shall be leviable on supplies made by a taxable person who has decid

S.9 Returns payments and refunds

       (1) Every taxable person, making a taxable supply of goods or services or both, shall -
       (a) pay the amount of cess as payable under this Act in such manner;
       (b) furnish such returns in such forms, along with the returns to be filed under the Central Goods and Services Tax Act; and
       (c) apply for refunds of such cess paid in such form, as may be prescribed.
       (2) For all purposes of furnishing of returns and claiming refunds, except for the form to be filed, the provisions of the Central Goods and Services Tax Act and the rules made thereunder, shall, as far as may be, apply in relation to the levy and collection of the cess leviable under section 8 on all taxable supplies of goods or services or both, as they apply in relation to the levy and collectio

S.10 Crediting proceeds of cess to fund

       (1) The proceeds of the cess leviable under section 8 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 utilised for purposes specified in the said section.
       (2) All amounts payable to the States under section 7 shall be paid out of the Fund.
       (3) Fifty per cent. of the amount remaining unutilised 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.
  

S.11 Other provisions relating to cess

       (1) 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.
       (2) The provisions of the Integrated 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, mutatis mutandis, apply in relation to the levy and collection of the cess leviable under section 8 on the inter-State supply of go

S.12 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.
       (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-
       (a) the conditions which were included in the total base year revenue of the States, referred to in sub-clause (g) of clause (4) of article 279A of the Constitution, under sub-section (3) of section 5;
       (b) the conditions subject to which any part of revenues not credited in the Consolidated Fund of the respective State shall be included in the total base year revenue of the State, under sub-section (6) of section 5;
 &nbs

S.13 Laying of rules before Parliament

Every rule made under this Act by the Central Government shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.

S.14 Power to remove difficulties

       (1) 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.
       (2) Every order made under this section shall, as soon as may be after it is made, be laid before each House of Parliament.

Sch. SEE SECTION 8 (2)

       1. In this Schedule, reference to a "tariff item", "heading", "sub-heading" and "Chapter", wherever they occur, shall mean respectively a tariff item, heading, sub-heading and Chapter in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
       2. The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), the section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this Schedule.