PRELIMS 2021 KEYS RAJA sir cracking IAS Academy

Latest News

EDITORIALS & ARTICLES

Elucidate the idea behind the GST compensation mechanism for the states

The GST compensation was the mechanism to suitably compensate states for loss of revenue arising out of implementation of the GST. The compensation mechanism was a unique feature that remained up to five years from the date of implementation of GST. Constitutional position
  • The nation-wide GST was levied based on the Constitution (One Hundred and First Amendment) Act, 2016.
  • The constitutional law also contained a provision for compensation that had to be given to states to adjust to the shortfall with 14% growth annually.
Idea behind GST compensation
  • Revenue shortfall It was believed the states would endure a revenue shortfall if they gave up their rights to impose local-level indirect taxes. This was adjusted in form of compensation.
  • Temporary stopgap The arrangement was to be stopgap until states government found out new avenues for raising revenue. It would not continue beyond five years.
Raising revenue
  • The funds for GST compensation were raised through a compensation cess levied on so-called ‘demerit’ goods.
  • This includes goods such as pan masala, tobacco, aerated waters and motor cars apart from coal.
Thus, GST compensation is very critical to states during the pandemic as they have lost their major revenue sources. Alternative mechanism has to be formulated to realize lost revenues.






POSTED ON 28-01-2022 BY ADMIN
Next previous

General Studies

Political Science and International Relations

Sociology

Some Reference Essays

List of previous year essay topics (1997-2019)

IAS GOOGLE is googled by the team of Raja Sir’s Cracking IAS Academy. Sources include The Hindu, Indian Express, pib.nic.in, Down To Earth, Economic Times, Vigyan Prasar, AIR and the like. IAS GOOGLE has been prepared in pace with emerging UPSC Trends.

LATEST NEWS

20 Dec
Delimitation Exercise in India
19 Dec
Constitution as a social force
18 Dec
Executive, Judiciary & Legislature - Interrelationship
18 Dec
December 18, 2024 Current Affairs

CATEGORIES

NEWSLETTER

Copyright © 2021 IAS Google. All Rights Reserved