Union Cabinet approves key changes to GST Constitutional Amendment Bill

July 28, 2016

The Union Cabinet has approved amendments to the GST (goods & services tax) constitutional amendment Bill in order to incorporate suggestions made by states.
This decision follows a crucial meeting of the Empowered Committee of State Finance Ministers on GST with Union Finance Minister Arun Jaitley.
Cabinet has approved

Removal of 1% additional tax on inter-state sales as proposed in the Constitutional Bill.
Removal of 1% additional manufacturing levy tax by manufacturing States from the Bill.
Inclusion of five years compensation clause for state governments for any loss that they may incur.
Adjudication of dispute between states and the Union Government by the GST Council, which will have representation from both the Centre and states.

Background
In the meeting of the Empowered Committee of State Finance Ministers, States had agreed that the 1% additional levy be removed from the Bill. They also had agreed to include 100% compensation formula in the Bill for the first five years of the implementation of the GST.