The Lok Sabha has passed the Goods and Services Tax (Compensation to States) Amendment Bill, 2017. The Bill amends the GST (Compensation to States) Act, 2017 and replaces an Ordinance promulgated in September 2017.
The amendment bill increases maximum rate at which Compensation Cess can be levied from 15 to 25% on motor vehicle for transport of not more than 13 persons (mostly luxury vehicles ), including the driver and motor vehicles falling under mentioned sub-headings
GST (Compensation to States) Act, 2017
The purpose this law is to provide compensation to state for a period of five years from the date on which the state brings its State GST Act into force. It allows the Union Government to notify rate of the GST Compensation Cess on items such as pan masala, coal, aerated drinks, and tobacco, subject to certain caps. The amount received by levying GST Compensation Cess is used to compensate states for any loss in revenue following the implementation of GST. The receipts from the cess will be deposited to a GST Compensation Fund. The receipts will be used for compensating states for any loss due to the implementation of GST.