In which of the following years was the Goods and Services Tax (Compensation to States) Bill passed?

Correct option is B

The correct answer is (b) 2017

• The Goods and Services Tax (Compensation to States) Bill was passed in 2017 to compensate states for any revenue loss after the implementation of GST.

• It was introduced under the provisions of Article 279A of the Constitution, following the enactment of the GST Constitutional Amendment Act (101st Amendment).

• The compensation was guaranteed for five years (from 2017 to 2022), with the Centre compensating states for losses if GST revenues fell short of 14% annual growth based on 2015–16 revenue.

• The law established a Compensation Cess on luxury and sin goods like tobacco, aerated drinks, and high-end cars to fund the compensation.

Information Booster:

• GST came into effect: 1st July 2017

• GST (Compensation to States) Act: Passed in March 2017

• Compensation formula: Based on 14% annual growth rate over the base year (2015–16)

• Compensation period: 5 years, i.e., from 2017 to 2022

• Cess-funded pool was created to ensure smooth transition for states shifting from VAT to GST