Most of the States to benefit from GST from day one

Union Finance Minister Arun Jaitley said that Goods and Services Tax (GST) will benefit most of the States from day one especially the consumer States. He assured the states that post GST implementation there would be no fall in revenue collections of the states. Provisions have been made in the Constitution Amendment Bill on GST introduced by him in the Lok Sabha on December 19, 2014 to ensure that none of them lose any revenue after the implementation of the GST.

In this regard the Minister mentioned that it is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. The Finance Minister said that this tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate.

The Finance Minister further said that the States have been ensured that there will be no revenue loss and the centre will compensate States for any loss of revenue arising on account of implementation of the GST for a period up to five years. He said that a provision in this regard has been made in the Constitution Amendment Bill. He said that the compensation will be on a tapering basis i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year. The Finance Minster was speaking in New Delhi on December 22, 2013 at the Meeting of the Parliamentary Consultative Committee attached to his Ministry.