Taxation: Goods and Service Tax (GST)

Definition – It is a comprehensive tax levied on the manufacture, sale, and consumption of goods and services.
Constitutional Backing – Introduced by the 101st Constitutional Amendment Act, on the lines of One Nation One Tax.

It was introduced as relief for States for the loss of revenues arising fro the implementation of GST.
As per the GST Act, states are guaranteed compensation for any revenue shortfall below 14% growth (base year 2015-16) for the first five years ending 2022.
GST compensation is paid using funds specifically collected as compensation cess- is levied on products considered to be sin or luxury goods.