NEW DELHI(PTI): The Cabinet cleared the process, formation and functioning of the GST Council, which…
NEW DELHI(PTI): The Goods and Services Tax (GST) Council will hold its third meet on Friday, to finalise the rules regarding registration, refunds and payment, and also take a view on exemption of goods under the upcoming Goods and Services Tax (GST) regime.
To be chaired by Union Finance Minister Arun Jaitley, the Council will also deliberate on a formula for payment of compensation to states for revenue loss in the aftermath of implementation of the GST.
“The meeting is likely to finalise on the rules on GST. Also, a presentation will be made by the officials on compensation,” an official said.
While 2015-16 will be the base year for calculating revenue compensation to states for any loss of receipts arising from roll-out of GST, the final methodology will be worked out in next meetings, the official added.
At the last meeting of the council, four alternatives came up for discussion for compensating states for loss of revenue after implementation of the GST.
They were, firstly, a state could be compensated if the revenue under GST fell short of the average tax earnings in best three years out of past five years.
Secondly, of the five years, two outliers are left out and average is taken. If the revenue under GST is short of this, then states are compensated.
Thirdly, a base year can be fixed and a particular growth rate decided for all states. If the revenue falls short of that, then the state gets compensated.
Another suggestion was to base compensation on a fixed rate of revenue growth.
The CBEC had already floated the draft rules for registration, refund, returns and invoice for the GST regime and sought stakeholder comments on the same.
The Central government plans to roll out GST from April 1, 2017, and has lined up meetings of the GST Council to build consensus among the states.