New Delhi, 10 July-2014, PTI: Salaried class has got something to cheer with Finance Minister…
NEW DELHI: Moving towards rolling out GST from April 1, Centre and states agreed on Thursday on a timetable for deciding on the tax rate and completion of legislative work but differences remained on the turnover limit for exemption from the new tax. The first meeting of the newly constituted GST Council saw states like Tamil Nadu and Uttar Pradesh demanding a larger say than one-state-one-vote principle that puts a smaller state on equal footing with a large manufacturing one.
While their demand was overruled, consensus also eluded first day of the meeting over the issue of exemption to dealers from the Goods and Services Tax (GST). While some states demanded traders with turnover of Rs 10 lakh or less be exempted, a large number, including Delhi, were in favour of the limit being fixed at Rs 25 lakh in a year. With tax collected from traders being just 2% of the total tax collection, majority view was in favour of a higher exemption limit.
The GST Council, which is headed by Union Finance Minister Arun Jaitley and includes representatives of all the 29 states and 2 union territories, will continue on Friday. At the meeting draft rules regarding GST were circulated and threshold for exemption and compensation norm discussed. Clarity on base year for compensating states for loss of revenue following implementation of GST, which is to subsume an array of central and state levies including excise, service tax and VAT, will be deliberated further on Friday.
Briefing reporters, Jaitley said that the timetable has been set keeping the April 1, 2017, deadline in mind. “The target also involves the passage of CGST and IGST law at the central Parliament and then by the state legislatures the state GST law in the winter session itself.
The GST Council meeting, which will continue on Friday, will discuss on the compensation formula and with regard to the provision for cross empowerment, he said. “With regard to composition we have finalised our proposal which has been unanimously accepted by the members. With regard to threshold for exemptions, there are two sets of suggestions which have come. We have converged to those two different views and both on officers and ministers track we will continue the meeting tomorrow and thereafter so that we are able to converge to one particular figure as far as the exemptions are concerned,” Jaitley said.
Also, doubts were cast over West Bengal Finance Minister Amit Mitra being appointed vice chairman of the GST Council in absence of the state approving the Constitution Amendment Bill. To get that chair and for any member to be eligible to vote on issues before the Council, their respective states have to clear the Constitution Amendment Bill on GST.
A consensus on compounding or composition scheme was arrived at the GST Council meeting on Thursday which decided that traders with gross turnover cut-off of Rs 50 lakh will pay 1-2% tax, Revenue Secretary Hasmukh Adhia said. The composition scheme provides for a easier method of calculating tax liability and it allows option for GST registration for dealers with turnover below the compounding cut-off. The scheme has been introduced in the Goods and Services Tax (GST) regime to reduce the administration cost associated with collection of tax from small traders. Accordingly businesses below a turnover of Rs 50 lakh can pay taxes at a defined floor rate of 1-2%, which will be much lower than the GST rate.
The Council in its subsequent meetings would take up the issue of GST rate.