NATIONAL LAW UNIVERSITY ODISHA

INDIRECT TAXATION

Project Submission

on

GST: A TRANSNATIONAL PERSPECTIVE

SUBMITTED TO,

Priyanka Anand

(Assistant Professor of Law)

NATIONAL LAW UNIVERSITY, ODISHA

Submitted by:

Manu Mishra (15bba033)

Mohit Khetan (15bba034)

Nishu Bhushan (15bba035)

 ACKNOWLEDGEMENT

We would like to take this opportunity to thank our mentor and guide Ms. Priyanka Anand to
have given us this wonderful research experience on which we could dwell deep into, which we
could not have done elsewhere, if not given this opportunity.

She truly enlightened us in this field and directed the correct way. Thank you.

table of content

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INTRODUCTION.........................................................................................................................3

COMPARISONS OF INDIAN GST WITH GST IN CANADA AND UK..............................4

COMPARISON BETWEEN INDIAN AND CHINA GST REGIME......................................6

Positive Effect of GST on Make in India.....................................................................................6

How would GST increase the demand for Chinese Goods:.......................................................6

Example of Sports Industry.........................................................................................................7

COMPARIOSN BETWEEN INIDAN AND MALAYSIAN GST REGIME...........................8

COMPARIOSN BETWEEN INIDAN AND SINGAPORE GST REGIME..........................10

Major Differences........................................................................................................................10

COMPARISON BETWEEN INDIAN AND AUSTRALIAN GST REGIME.......................11

COMPARISON BETWEEN INDIAN AND NEW ZEALAND GST REGIME...................13

WHY THE BIGGEST ECONOMY OF THE WORLD HAS NO GST?...............................15

COMPARISON BETWEEN TWO REGIMES......................................................................................15

Similarities.................................................................................................................................15

Differences.................................................................................................................................15

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GST BENEFICIAL FOR INDIA BUT NOT FOR USA..........................................................16

GST: IS IT TRULY A THREAT TO FISCAL FEDERALISM IN INDIA?.........................17

A uniformity of tax rates will undermine tax competition........................................................17

COMPENSATION TO STATE...........................................................................................................19

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 INTRODUCTION

Out of the total number of countries in the world, 160 countries have opted for GST and India is
one of them. Among the developing and emerging economies India has highest tax rate at 18%-
many of the major items or commodities falls under this slab. Two of the other major emerging
economies and part of the BRICS i.e. China and Brazil have of most major items or commodities
in the tax slab of 17% and 10% respectively. But, it has also been observed that some of the
developed economies like Germany and France have GST rate between 19%-20%. One of the
survey conducted by the OCED indicated that the average rate of GST in major economies of
OCED countries is in the range of 20%-22% which is higher than the rate of tax which is
applicable in India on most of the items. One of the major differences that is there in the GST in
India and other countries is that there are four slabs in India. There are only two countries other
than India that have dual GST model those countries are Brazil and Canada.

One more difference between India and other countries is that in India the tax is payable at the
final point or where the consumption takes place but in other countries the tax levied on value
added goods and services at every point of the supply chain. A dual tax regime is followed in
India. In this kind of system, the tax structure in the state and center are different and this model
is also being followed in the GST.

One more difference is that in many countries across the world the tax rate or the GST rate is in
the range of 15-20 percent while in India the GST rate is in the range of 5-28 percent.

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 COMPARISONS OF INDIAN GST WITH GST IN CANADA AND UK

The Goods and services tax as it is named in India comes by the name of Federal goods and
services tax and harmonized sales tax in Canada. Canada introduced GST in 1991 at the rate of
5%. The dual model followed Brazil and Canada was adopted by India but Canada gives an
option to provinces to go for state or central GST. A separate federal GST is applicable to the
province of Quebec as it is a quasi independent province. In United Kingdom the name of this
tax is value added tax (VAT).

In India this tax is levied in 4 brackets 0% which refers to the items exempt from GST like food
grains, 5%, 12%, 18%, 28% and also cess is added for luxury items. In Canada the federal goods
and services tax is 5% and the harmonized sales tax varies between 0 to 15%. In the United
Kingdom the standard value added tax is 20% the reduced value added tax is 5% and certain
things are exempt from VAT.

The exemption threshold limit is 20 lakhs and is reduced to 10 lakhs for North Eastern states.
Thus GST will apply when the turnover of the business exceeds 20 lakhs in India. This limit has
been raised from the previous value of 10 lakhs and 5 lakhs for North Eastern States. Thus small
manufacturers also who have a threshold of more than 20 lakhs will have to register under GST.
The Canadian threshold limit is $ 30,000 which is equivalent to 15.6 lakh Indian Rupees. In
United Kingdom this limit is way higher at 73, 000 pounds which is equivalent to 61.32 lakh
Indian Rupees.

The tax liability arises in India on accrual basis which is issue of invoice or receipt of payment
whichever is earlier. In Canada also this liability arises on accrual basis where the date of issue
of invoice or the date of receipt of payment whichever is earlier is seen. In United Kingdom also
this is on accrual basis depending on invoice or payment or supply whichever is the earliest.

The reverse charge mechanism in Indian Law applies to goods as well as services which were
earlier under service tax. This reverse charge mechanism is also prevalent in the United
Kingdom. In Canada reverse charge mechanism applies to importation of services and intangible
properties.

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In India food grains, alcohol, petroleum, tobacco products are exempt from GST. In Canada
Real estate, financial services, rent on residence, education charities and health are exempted
from the purview of GST. In the United Kingdom medical services, postal services, education,
finance, insurance are exempted from GST.

1
https://cleartax.in/s/gst-india-and-other-countries-comparison; last accessed on 21th August 2018.
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 COMPARISON BETWEEN INDIAN AND CHINA GST REGIME

A state-run Chinese media outlet said “forceful leadership” like in China, the world’s second
largest economy, to implement it and what does it mean by it.

A forceful leadership, which enabled China to implement policies effectively to achieve rapid
economic development since the reform and opening-up, is exactly what India needs to ensure
full compliance with the reforms throughout the country. Given the fragmented market
conditions, the country still lags far behind China in terms of policy execution.

Positive Effect of GST on Make in India

The GST is going to heavily hit this supply chain in the following manner:

-As GST will put an end to unregistered interstate movement of goods, the traders of Chinese
products will come under the scanner.

-Traders under exemption and incentive schemes (20 lakh-75 lakh) can't be allowed to go for
interstate trade. Therefore, supplies of cheap imports to the upcountry from regional trading
centres won't be possible without going through the GST network.

-Only a small quantity of Chinese imports will be able to seep out from the GST network
through the fake B to C trade.

-The trade of Chinese goods is likely to be confined within local markets in state boundaries and
volumes will dip significantly.

-Chinese goods may lose their price advantage if they move through the GST network after
paying prescribed duties.

-Interestingly, the government has placed quite a few goods like ceramics, plastics, sanitary ware
including the highly criticised sanitary napkins in higher tax brackets of GST as an apparent
measure to curb Chinese dumping.

How would GST increase the demand for Chinese Goods:

GST's impact on cheap supplies will be painful in the short-term because:

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1) Cheap Chinese products significantly bust inflation in segments like construction, plastics,
house wares and electronics. Consumers may face shortage of supplies in these areas in the
coming months. There is a buzz on the street that traders have already cancelled their orders for
the festive season.

2) This may lead to unprecedented inflation in products and services heavily dependent on
Chinese inputs.

3) There will be job losses in retail trade in cities and town on the back of the Chinese factor.

4) Some impact of GST on Chinese imports will be visible in the next six months on cheap
consumables if not on the large supplies.

Example of Sports Industry

To take an example: All the players or coaches or anyone who constitutes or is a part of any
sports body can import sports goods and it will not attract any custom duty. But the goods that
are made in India would attract GST of 18%. This kind of taxation system would have an
adverse impact on the competitiveness of Indian-made sports goods. For example, according to
notification no. 146/94 of the GST Council that was based on 19 th June meeting any sports
federation or some o the specified sportspersons are allowed to import tables of tennis tables
without paying any import duty or IGST. So, this means that if a specified sportsperson buys a
table of table tennis from China then he does not have to pay any import duty but if the same
good is bought from a local manufacturer then a GST of 28% would be levied. This will make
the sports goods made outside India cheaper than the sports goods made in India.

However, the GST is a double-edged sword. It may firewall cheap imports but may not make
domestic production cheaper for small scale industry due to heavy taxes on several products with
steep cost of compliance.

GST may come as a disruptor to Chinese imports in India, but whether it makes India's small
manufactures competitive will remain a question.

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 COMPARIOSN BETWEEN INIDAN AND MALAYSIAN GST REGIME

According to the plans formulated by the government the GST was to be implemented in the
third quarter of 2011 but because of some reasons it was delayed until 1 April 2015. The purpose
of implementing the new tax regime was to replace the services tax and sales tax which was in
place for several decades. The government also wanted to increase the total revenue to reduce its
budget deficit and also its dependency on the revenues extracted from Malaysia’s state-owned oil
company. The services tax and sales tax in the range of 5-15 percent is being replaced by GST of
6%.

As India embarks on its biggest tax haul in history with the implementation of GST, it is
worthwhile to take stock of Malaysia’s example and experience in shifting to the GST. This
could provide some insight to the kind of problems that might be anticipated for India, and the
possible expectations on the vehicle industry.2

When it comes to similarities of the GST of both the Countries they almost have the same
structuring and they only differ in few circumstances.

Almost both the countries have same exceptions to the GST such as; Agricultural products –
paddy, fresh or chilled vegetables, certain provisionally preserved vegetable Essential foodstuff –
oils, salt, flour, Livestock and livestock supplies or poultry – live animals and unprocessed meat,
Eggs, Fish, First 300 kwh of electricity for domestic use, Water for domestic users, Exported
goods and services, Sale of Residential Property.

But India keeping in mind the economic conditions of the State introduced certain other
exceptions such as: Handlooms, silk production, printed books, blood and its components, all
types of contraceptives, hand tools and space craft.

The other important difference is that unlike Malaysia India does not have a single centralised
GST but instead we have dual GST (centre and State GST)

When it comes to Indian Dual GST the breakup in tax levying is in the following manner:

2
Meg Sunako,< http://www.thehindubusinessline.com/specials/auto-focus/where-india-can-learn-from-malaysias-
gst-experience/article9733571.ece> last accessed on 14th Aug 2018.

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At the Central level, the following taxes are being subsumed:

1. Central Excise Duty,

2. Additional Excise Duty,
3. Service Tax,
4. Additional Customs Duty commonly known as Countervailing Duty, and
5. Special Additional Duty of Customs.

At the State level, the following taxes are being subsumed:

1. Subsuming of State Value Added Tax/Sales Tax,

2. Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax
(levied by the Centre and collected by the States),
3. Octroi and Entry tax,
4. Purchase Tax,
5. Luxury tax, and
6. Taxes on lottery, betting and gambling.

In India unlike Malaysia the Central GST and the State GST would be levied simultaneously on
every transaction of supply of goods and services except on exempted goods and services, goods
which are outside the purview of GST and the transactions which are below the prescribed
threshold limits.

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 COMPARIOSN BETWEEN INIDAN AND SINGAPORE GST REGIME

The country introduced the bill in April 1994 at a tax rate of 3% to make it acceptable to the
public and to minimize inflation. The government committed not to raise tax for next 5 years
which came in as a important decision in reviving consumer spending. Also, Singapore
introduced a compensation scheme under the GST which provided support to the needy and
underprivileged. However, in initial stage of GST, the country faced uptick in inflation to 3.1%
in 1994 from 2.3% in 1993. But after that it moderated below 2% between 1995 – 1996.3

Major Differences

1) Unlike India, other countries have a much higher threshold for GST applicability thus
reducing the burden for small businesses. This will bring in challenges for our SMEs.4
2) India does not follow an ideal VAT. Central sales tax which the central imposed on the sale of
goods from one state to another will continue in the different form called Integrated GST.

3) One big differentiation between GST in India and GST in other countries is that, in India two
types of GST is charged - hence called as duel GST.

3
http://< http://www.zeebiz.com/india/news-gst-in-india-versus-gst-in-the-other-countries-what-differentiates-india-
16838> last accessed on 21st Aug 2018.
4
Ibid.
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 COMPARISON BETWEEN INDIAN AND AUSTRALIAN GST REGIME

Though the GST concept was first seeked in the year 1975, it was implemented in Australia after
25 years on July 2000 at a tax rate starting at 10%. Australia also repealed a host of previously
existing taxes like the wholesale sales tax (WST), debit tax, financial institutions duty, and stamp
duty on shares, leases, mortgages and cheques.5

In the case of India, GST rate is broken down into four slabs and various articles are being
placed under the slabs. There are four GST rates–5, 12, 18, and 24 per cent. There is also a sin
tax–40%–which will be implemented in rare occasions. However, for other countries, GST
actually means one country one tax.

Going farther afield, in Australia, GST is a federal tax which is collected by the supreme
authority and later divided among the states, however, in India there is a dual GST regime in
which tax is collected by both central as well as the state government.

Further, the implementation of New Tax System package in Australia, including New Tax
System (Goods and Services Tax) Act of 1999, was considered a landmark change to the
Australian tax system. The basic rule of GST in Australia is destination-based consumption tax,
with limited tax base exclusions. However, the10% tax rate resulted to a fall in revenue earned
through tax and productivity reduced from a tax collection standpoint.

Certain supplies, such as certain food products, most medical and health services, drugs, medical
aids and appliances, most education courses, childcare, exports, religious services, and
international transport are known as GST-free (other counties refer to these as zero-rated).

Further financial supplies, residential rent, residential premises, precious metals, school
shops and canteens and fundraising events conducted by charities are known as input-
taxed supplies (other countries refer to these as exempt) and no GST is applicable on such
supplies.

5
Reuters, Comparing India’s GST with other Asian jurisdictions, can be accessed at
http://www.newindianexpress.com/business/2017/jun/30/factbox-comparing-indias-gst-with-other-asian-countries-
1622581.html. Last accessed on- 24th Aug, 2018.
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Some transactions are outside the scope of GST, for example, gifts made by people who are
unregistered or have no connection with Australia.

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 COMPARISON BETWEEN INDIAN AND NEW ZEALAND GST REGIME

GST in New Zealand was introduced in 1986 at a rate of 10%. However the rates were changed
twice later – 12.5% in the year 1989 and 15% in 2010 in a move to mobilize higher revenue
while removing distortions in the tax structure.6 However, India has dual GST system (both
central and state government levying tax) with different slabs rates of 5, 12, 18, 28 percent.

This led to adoption of GST at single rate with food included in the GST base at the full rate.
Such broad-based the tax net and also reduced both compliance and administrative costs. At
present, the country is highest tax productive nations among OECD countries.

The reason why VAT GST is so effective, is that it is self-enforcing. Everyone in the chain
enforces the tax. In 1975 individual income taxpayers paid 62.3 per cent of total tax revenue. By
1984 individual income taxpayers paid 75 per cent of the total government tax revenue despite
earning only 59 per cent of income. After the GST was introduced in 1986 the proportion of total
tax revenue paid by individual income tax payers had dropped to only 56 per cent in 1989.7

The New Zealand GST, enacted in 1988, was designed as a comprehensive tax base including
many difficult-to-tax goods and services. The New Zealand GST became an international
benchmark for indirect tax design. For instance, the Institute of Fiscal Studies of United
Kingdom considered the New Zealand GST model as the benchmark for evaluation of European
VAT Directives.8

When supplying certain goods and services, such as exported goods and services or
telecommunication services, the supplier is governed by a territorial authority. Proceeds from the
local authorities, sales of going concern (slump sale), and sale of land are subject to GST at the
rate of 0%.

6
New Zealand Inland Revenue, can be accessed at: http://www.ird.govt.nz/?id=201405MegaMenu, last accessed on
26th August 2018.
7
Richard Prebble, A personal reflection on the Goods and Services Tax-the New Zealand Experience, The
Australian Quarterly, Vol. 64, No. 2, Special Fightback Issue (Winter, 1992), pp. 115-122, URL:
http://www.jstor.org/stable/20635669 last accessed on 24th August,2018.
8
Ibid..
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Supply of certain goods and services, such as private property (car or home not used for
business), financial services such as interest payment on loan or bank fees, donated products and
services sold by non profit organizations, rentals of residential property, and penalty interest are
all exempt from GST.

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 WHY THE BIGGEST ECONOMY OF THE WORLD HAS NO GST?

With the implementation of GST in India, a debate has started on why India should really move
to a GST when the United States of America, an equally throbbing and way too economically
advanced democracy, as compared to India, has not even raised a murmur on embracing the GST
by its constituent States.

COMPARISON BETWEEN TWO REGIMES

Similarities

Both the countries have federal structure and the states have full autonomy to charge Sales Tax
over the commodities. Each State has their own set of exemptions for goods, which are either use
based or entity based (ex- charitable entity, government body etc.) Sales tax compliance
including registration, filling is all done online with minimal intervention by Sales Tax authority.

Differences

One of the major differences will be that USA is a Tax compliance society. India has very poor
tax compliance as only 17.7% of the GDP comes from taxes whereas, in USA Tax to GDP ratio
is 26.9% Tax9. Rank of India in ease of paying taxes is 119 whereas, USA is at no. 36 10 and only
5% of the Indian voting population actually pay taxes. Tax evasion and avoidance is one of the
major problems in the India economy.

In USA, Sales Tax is levied on retail sales or on supplies to the final customer and not in the
intermediary level where as, in India goods are taxed on every intermediate level where value is
added (VAT) for which Tax credit are available to the buyer. However services can be taxed by
Central government and cross credits of VAT and Services are not available to the buyer. In
USA even States can charge taxes on some specified services.

9
PWC, "Worldwide Tax Summaries" Pricewaterhousecoopers, 2016-17.
10
PWC Global, Paying Taxes 2018. [Online] https://www.pwc.com/gx/en/paying
taxes/pdf/pwc_paying_taxes_2018_full_report.pdf last accessed on 25th August, 2018.
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Inter-state supplies of goods and services are not liable to sales tax in the US, unless the supplier
of goods or services has a presence in the selling state whereas inter-state supply of both, goods
as well as services is liable to tax in India.

Sales Tax compliance by businesses in the US is generally done with the help of software
packages marketed by many large software companies whereas in India, VAT and service tax
compliance is generally managed in-house by companies with the help of trained resources; this
compliance is out-sourced to consulting Firms only by large Corporate and multi-national
corporations (MNCs).

GST BENEFICIAL FOR INDIA BUT NOT FOR USA

Having understood the similarities and differences in the two tax administrations, it is not
difficult to ascertain why the GST has not exactly been a hot topic of debate in the US while it
continues to be in a country like India. Cascading tax costs on account of lack of fungibility
between state VAT and federal service tax and excise duties in India is the single largest factor
that is pushing businesses to support GST, this is not the case in the US, where intermediate
supplies are not taxed. Municipal Corporations in the US are also empowered to levy substantial
taxes on sale and use of goods and services thereby curbing the tendency of States to impose
sales tax at a high rate whereas in India, Municipal Corporations do not levy separate sales tax
and depend to a large extent on the State Government for funding, hence State VAT rates in
India are very high as compared to the State Sales Tax rates in the US.

Heavy reliance on human resources for discharging the compliance burden also puts a strain on
the costs of doing business in India whereas in the US, automated software packages and the
State support does alleviate the compliance burden on businesses.

In conclusion United States is a strict federal republic ensuring great autonomy for the states, i.e.
issues of financial independence like taxation etc lies with the states to a great extent.

 Indirect taxation is seen as a regressive regime worldwide which leads to the mild political
support for GST in American left, especially the Democratic Party. Since constitutional
amendment in America is a rigid task, lack of support for it in the political arena makes it a pipe
dream, at least in the imminent future.

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 GST: IS IT TRULY A THREAT TO FISCAL FEDERALISM IN INDIA?

India has a federal form of government and hence a federal finance system. The essence of
federal form of government is that the Centre and the State Governments should be independent
of each provided with sources of raising adequate revenues to discharge the functions entrusted
to it. For the successful operation of the federal form of government, financial independence and
adequacy form the backbone.

The GST is a tax reform that has been on the table for more than 15 yrs. In principle, it is the
same as the Value-added Tax (VAT) which has been already adopted by all Indian States but
GST has a wider base. While the VAT, which replaced the Sales tax was imposed only on goods,
the GST will be a VAT on goods and services. The Constitution gave the states the control over
sales tax, which accounts for, on average, for 80% of their revenue. 11State level taxes on
commodities and services as a percentage of State GDP vary from 13% in Karnataka and 15% in
Tamil Nadu, to 33% in West Bengal. The varying rates of taxes across states is one of the factors
which decides how economically free a state is.

According to Economist Prabhat Pattnaik “States should have complete autonomy over the Sales
Tax, this autonomy was curtailed by introduction of VAT. But, it did not completely succeed as
VAT still had four different rates that states could play with, But with GST which imposes a
uniform rate this limited autonomy is even gone.”

A uniformity of tax rates will undermine tax competition

To undermine that competition has consequences — even if one acknowledges the benefits of

GST, the resultant institutional arrangement will alter the rules of the game and would result in a
greater centralization of power. By centralization of power I don’t merely mean that greater
power will vest in the central government, but that decision-making itself will be concentrated
in one place (the GST council) instead of being spread across 29 jurisdictions in the country.12
11
G. Sampath, GST: Good for business, snag for federalism?, The Hindu, April 03, 2016 can be retrieved at
http://www.thehindu.com/opinion/op-ed/gst-good-for-business-snag-for-federalism/article7279180, last accessed on
25th August 2018.
12
Center for civil society, GST threatens to undermine fiscal federalism and tax competition, can be accessed at
https://spontaneousorder.in/gst-threatens-to-undermine-fiscal-federalism-and-tax-competition-ffc3ab9e3030, last
accessed on 25th August, 2018.
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Although States have been provided with considerable voting power but still state who dissents
to a particular policy has to agree with the majority view of the council and has to implement
that.13 Considering the fact that different states have different needs and vision for the future,
they still have to agree with the policy that might not be beneficial for them. So, it determines the
State sovereignty as they do not have the right to determine the tax policies that are beneficial for
the State. This may lead to conflict between the States as well as between the State and the
Centre. The rates will be fixed by category and State cannot shift a commodity from a lower to a
higher rate, or put it in the exempt category.  Once the rates are set by the GST Council,
individual States will lose their right to tax whichever commodities they want at the rates they
want. Governments that were elected laid an emphasis of social spending. They used to levy
different indirect taxes to balance that expenditure. Now after the GST States will not have that
power.

GST council is being criticized on the basis of dispute resolution system in the current Act. The
current Act seeks to entrust the power of dispute resolution to the GST council, instead of an
independent body like GST Dispute Settlement Authority as proposed earlier. Now the question
which is still unanswered is how council itself can resolve the disputes arising out of its own
recommendations.

Each state will have only one vote regardless of their size, level of development. The express
purpose of the GST is to concentrate on manufacturing and achieve excellence so that the same
product is not manufactured locally with sub-optimal efficiency in every state for tax reasons.
That being the case, it is natural that there are going to be only a few manufacturing state and
others will be consumers. Now both manufacturing and consumers states both will have one vote
each, it may be unfair for the states.

Governments that were elected laid an emphasis of social spending. They used to levy different
indirect taxes to balance that expenditure. Now after the GST States will not have that power.

13
Constitution of India 1950, Art. 279A (66% of the voting power lies with the states).
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 COMPENSATION TO STATE

At present, the Centre collects 62% of the total tax revenue, but with the onset of the new
regime, the taxing muscle of the centre with respect to indirect taxes has been expanded to 83%
of the overall tax revenues, leaving the states’ treasury high and dry. The 14th Finance
Commission advised the Centre to provide 100% compensation to the states for their revenue
loss after implementation of GST for the first three years. The fourth year would bring 75%
compensation, and the fifth year 50% compensation. This, however, did not pacify the states who
demanded full compensation for five years. The Centre agreed to this demand in December
2016, settling one of the most contentious issues delaying GST.

The next question, however, was how the Centre was going to finance this compensation
package, which experts estimated could be as much as Rs 55,000 crore.

Now an act has been passed in parliament which will provide compensation to the States for loss
of revenue arising on account of implementation of the goods and Service Tax for a period of
five years.14

Nominal growth rate projected revenue has been decided at 14% and base year will be financial
year 2015-16. The revenue will be the sum of revenue collected by the State and local bodies
during the base year, taxes levied by the States or Centre net of refunds, with taxes namely,
VAT, CST, Entry tax, Octroi, local body tax, Luxury tax, Advertisement tax, Excise duty on
medicinal and toilet preparation and any cess or surcharge levied by State Government.

Local bodies’ taxes (other than state taxes) will be excluded however Service Tax in J & K State
will be included in revenue. Total Revenue will be calculated and released on a quarterly basis to
States and to raise the money for the compensation a Cess for 5 years (GST Compensation Cess)
will be levied. These additional cesses, however, will be removed after five years, Finance
Minister Arun Jaitley has repeatedly said, adding that the states incurring losses would have to
find alternative sources of revenue.15

14
Section 18 of the Constitution (101st Amendment) Act, 2016.
15
TCA Sharad Raghavan, How the Centre will ensure GST won’t hurt states’ finances, can be accessed at
http://www.thehindu.com/news/national/how-the-centre-will-ensure-gst-wont-hurt-states
finances/article19186749.ece, last accessed on 24th August 2018.
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