Moving on fast track to meet the April 1, 2017 target to roll out the landmark Goods and Services Tax (GST), the Centre and the States in the first meeting of GST Council, resolved three crucial issues which includes threshold for exemption, the draft compensation formula and the issue of dual control.
The newly constituted council decided to keep revenue exemption limit at Rs 20 lakh for all states with the exception of north eastern and the hill states where the limit will be Rs. 10 lakh. While the exact compensation formula based on the revenue projection will be worked out, all cesses will be considered under the compensation from the Centre. States have indicated that the compensation for any loss from the GST rollout should be paid at regular quarterly or bi-monthly intervals.
Resolving issues over dual control over small traders, GST council has also decided that businesses with an annual turnover of up to Rs. 1.5 crore will be assessed by the States. For those above the threshold, there will be an element of dual control and they will be assessed either by the Centre or States based on a formula for risk assessment. A mechanism would be worked out for traders above Rs 1.5 crore to ensure that a dealer is regulated either by the Central government or the state government and not both. It was also decided that the 11 lakh existing service tax assesses will be assessed by the Centre and State officials after training will begin to help assess future assesses.
The two day GST Council meeting was chaired by Union Finance Minister Arun Jaitley and including representatives of all the 29 states and 2 union territories also decided that 2015-16 will be the base year for calculating revenue compensating to states for any loss of revenue arising from rollout of GST, the final methodology will be worked out in next meetings,. The GST Council will have next meeting on September 30 to discuss the categories of goods and services that would be exempt from the GST. After that, it would also meet on October 17, 18 and 19 to finalise the tax slabs for GST as well as the crucial rates at which the GST would be paid by consumers.