States will receive provisional compensation from Centre for loss of revenue from implementation of GST every quarter but the final annual number would be decided after an audit carried out by CAG. The compensation would be met through levy of a cess called 'GST Compensation Cess' on luxury items and sin goods like tobacco, for the first five years. Any excess amount after the end of five year tenure in the 'GST Compensation Fund' so created, would be divided between Centre and states, said the draft GST compensation law made public by the Centre today. The Council, at its earlier meetings, decided on a 4-tier GST tax structure of 5, 12, 18 and 28 per cent. 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.

Source: dna November 26, 2016 10:54 UTC