CBEC Chairman Najib Shah has said that the government will share the model GST law with the states, which has been redrafted after taking into account the comments of stakeholders. He further said that the Compensation law will also be shared with the states on November 16 detailing the procedure for making good revenue loss of states in the first five years of GST rollout.
The Centre and states have already decided on a four-tier GST rates-- 5, 12, 18 and 28 percent-- but is yet to decide on the issue of cross empowerment to avoid dual control. Differences arose with the states demanding control over 11 lakh service tax assessees, and the Centre proposing to do away with the states having exclusive control over all dealers up to an annual revenue threshold of Rs 1.5 crore -- an issue which was settled in the first meeting of the GST Council.
The Council has came up with two proposals -- horizontal division and vertical division options, 'Horizontal division' would mean taxpayers would be divided both for administrative and audit purposes based on a cut off turnover. Those with a turnover over Rs 1.5 crore would be administered both by the Centre and states, while those with below Rs 1.5 crore would be administered solely by the states. While, under the 'vertical division', taxpayers could be divided in a ratio which would balance the interest of the Centre and the state, both with respect to revenue and spread of numbers.