GST council to finalise the rules for registration, refunds and payment

After resolving contentious issues of threshold and dual control under the new taxation regime, the GST council chaired by Union finance minister Arun Jaitley will further meet on September 30, to finalise the rules for registration, refunds and payment as well as the categories of goods and services that would be exempt from the GST. 

The council will also hold discussion on a formula for payment of compensation to states for revenue loss in the aftermath of implementation of the GST. While 2015-16 will be the base year for calculating revenue compensation to states for any loss of receipts arising from rollout of GST, the final methodology will be worked out in next meetings.

At the last meeting of the council, four alternatives came up for discussion for compensating states for loss of revenue after implementation of the GST. A state can be compensated if the revenue under GST falls short of the average tax earnings in best three years out of past five years. Secondly, of the five years, two outliers are left out and average is taken. If the revenue under GST is short of this, then states are compensated. Thirdly, a base year can be fixed and a particular growth rate decided for all states. If the revenue falls short of that, then the state gets compensated. Another suggestion was to base compensation on a fixed rate of revenue growth.

The GST Council had recently issued draft rules for GST registration, refunds, returns and invoice, 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. The government aims to implement the new indirect tax regime Goods and Services Tax (GST) from April 1, 2017.