GST Council meet begins today, state and Centre to try and reach consensus on division of control
Apart from crucial issues like tax rate and exemption, the council is also likely to select a vice chairperson from among the state finance ministers.
The Goods and Service Tax Council will hold its first meeting on Thursday to discuss tax rates, exemptions and tax divisions. Over the next two days, the state finance ministers and the ministers of state in-charge of revenue will try to reach a consensus and resolve the differences between the Centre and the states, as Union Finance Minister Arun Jaitley conducts the meeting.
Of all the issues, the most contentious one is the division of control between the states and the Centre, reported PTI. During the last meeting with Jaitley on July 26, the states had demanded that they should be given the legal and administrative power to impose tax on small businesses with turnover of up to Rs 1.5 crore. Consequently, the states will pay the Centre its share. Large establishments, on the other hand, that have over Rs 1.5 crore turnover, will be taxed by the Centre and the states will get their shares later.
The second issue is that of exemption. While the Centre has proposed that small traders with annual turnover of up to Rs 20-25 lakh will be exempted from the GST, the states have demanded that there should not be any change in the limit and the cap should be kept at Rs 10 lakh, as it is now. However, the limit for special category and North East states will be Rs 5 lakh. Apart from these key points, the council is also likely to select a vice chairperson. According to PTI, the vice chairperson will be one from among the state finance ministers.
The GST is a single indirect tax that will include most of the Central and state taxes such as excise duty, service tax and value-added tax. The Bill was unanimously passed by Parliament during the Monsoon Session last month. Till now, more than 18 states have ratified the Bill.
According to Livemint, the Centre and states will have to finalise three draft legislations over the next two months so that the new tax regime can be implemented by April 1, 2017. The Centre now aims to introduce GST legislations – Central GST and Integrated GST – during the Winter Session of Parliament in November.