New Delhi, September 23: The chairman of Good and Service Tax Council and Union Minister of Finance, Arun Jaitley have officially said that the GST exemption threshold is fixed at Rs 20 lakh of annual turnover for most states, here on second day of GST council meet on Friday. While, the exemption threshold for GST in North-East states, is fixed at Rs 10 lakh of annual turnover.
The decision comes on the second day of the council meet where agenda laid for the day were getting an agreement on exemption threshold, defining control of central and state tax officials over assesses and compensation to states for five years, in the event of revenue loss.
India is heading for a comprehensive tax reform with GST. Today Jaitely also updated that all cesses will be subsumed in GST.
In a bid to reach a consensus on all issues related to rules of business before Novemeber 22, the government has said that GST Council will finalise tax rate and slabs at its meeting on October 17 to 19. The council will meet again on September 30, followed by 3 meets on October 17, 18 and 19 respectively.
Fianance Minister also said that businesses with annual turnover of less than Rs 1.5 crore will be assessed by state authorities. While those above 1.5 crore would be jointly addressed by the central and state government.
On the day 1 of the council meet consensus was arrived on deadline of April 1, so as to implement GST across the nation as per the set time table. The government has been in the running to finalise the rules of council, including tax rate, exemption threshold and disputes redressal in the meeting.
Briefing reporters at the end of first day of the meeting, Union finance minister and GST Council chairperson Arun Jaitley said the timetable has been set keeping the April 1, 2017, deadline in mind.
After the conclusion of first day Council Meet, Jaitely hailed and said “The GST council meet was held in true federal spirit.”
Clearing tax burden of small businesses, a compounding or composition scheme is also formulated where in businesses below a turnover of Rs 50 lakh are required to a nominal tax of 1-2 per cent only.
On day 1 different states suggested varied turnover limits. While Delhi wanted the threshold to be fixed at Rs 25 lakh of annual turnover, Uttar Pradesh was keen on Rs 10 lakh. Uttar Pradesh said it would lose 7.8 per cent of tax revenues if the threshold is kept at Rs 25 lakh while Delhi was worried that its small traders would be hit if the threshold is kept at Rs 10 lakh. However, the majority view was in favour of a higher exemption limit as tax collected from traders is just 2 per cent of the total tax collection.
The meeting also saw states like Uttar Pradesh and Tamil Nadu demanding a larger say that one-state-one-vote principle which puts a smaller state on equal footing with a state that has strong manufacturing industry. However, this demand was overruled.
“The target also involves the passage of CGST and IGST law at the central Parliament and then the state GST law by the state legislatures in the winter session itself. Today, starting from September 22, we roughly have two months time till November 22 to resolve all outstanding issues and therefore a draft timetable was given which also have been adopted,” said FM Jaitely.
Read More: GST council to mull rules of business