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Cabinet Clears Key GST Amendments, 1% Inter-State Tax Abolished

The Cabinet also agreed on compensating states for any loss of revenue in first five years of GST.

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Cabinet on Wednesday dropped the one percent additional tax on inter-state sales as proposed in the Goods and Services Tax (GST) Bill, approving key constitutional amendments to the GST Bill.

The Cabinet also agreed on compensating states for any loss of revenue in first five years of GST subsuming all indirect tax levies including VAT.

The Cabinet, headed by Prime Minister Narendra Modi, decided to include in the Constitutional Amendment Bill that any dispute between states and the Centre will be adjudicated by the GST Council, which will have representation from both the Centre and states.

On Tuesday, Finance Minister Arun Jaitley had convened a meeting of the Empowered Committee of State Finance Ministers, where the Centre and states agreed on the principle that the tax rate will be lower than the current levels.

The GST Bill with the changes approved by the Cabinet, could come up in the Rajya Sabha as early as this week, or by next week.

(With PTI inputs)

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