State Govts Will Get One Year To Implement GST

State governments will get a period of one year to implement the provisions of goods and services tax (GST) after it comes into effect from April 2016. GST is meant to replace all indirect taxes levied on goods and services by both, the Central and state governments, and create a single tax system across the country.

“The one-year grace period is only a transitory provision and all states will have to finally implement it. States are on board. This would “take care of any inconsistency which may arise with respect to any law relating to tax on goods or services or on both in force in any State on the commencement of the provisions of the Act,” a senior official said.

Some states like West Bengal and TamilNadu are against the imposition of GST without agreement on revenue neutral rates, compensation methodology etc.

As far as the compensation to states to make up for loss of revenue, if any, due to GST, the Centre will provide 100% compensation in the first three years, 75% in the fourth year and 50% in the fifth year.

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