The Goods and Services Tax (Compensation to States) Act, 2017

The Goods and Services Tax (Compensation to States) Act, 2017 was enacted to provide for compensation to the states for the loss of revenue arising due to the implementation of Goods and Services Tax (GST). The Act provides for the setting up of a GST compensation fund, which is financed through a cess on certain goods and services. The cess collected is used to compensate the states for the loss of revenue caused by the introduction of GST. The Act also establishes the mechanism for calculating the compensation due to each state and the manner of disbursement of the compensation. The GST (Compensation to States) Act, 2017 is an important legislation that aims to ensure that the states do not face any revenue shortfall due to the implementation of GST.