The Empowered Committee of state Finance Ministers Goods and Service Tax (GST) wants the annual business turnover floor limit for the imposition of the levy reduced from Rs. 25 lakh to Rs. 10 lakh. This would make tax compliance easier as the threshold in most states for the Value Added Tax (VAT) is also Rs. 10 lakh turnover.
In a meeting held here on Wednesday, the Empowered Committee demanded that the Centre include the provision for GST compensation to States in the Constitutional Amendment Bill itself for the introduction of the new tax.
Empowered Committee Chairman Abdul Rahim Rather told reporters after the meeting: “We are hopeful that as the Union Finance Minister said it will come in Winter Session”. Union Finance Minister Arun Jaitley has said that the government will try to bring in the new GST Bill in Winter Session of Parliament. The GST’s rollout is delayed as States have some issues with the Centre’s proposed draft for this Bill.
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The Empowered Committee demanded for States that the legal powers to collect the Central GST from those businesses that have annual turnovers of up to Rs. 1.5 crore. With consensus remaining elusive on a number of issues, the Centre has indicated it could take the lead and introduce a Central GST and States could later follow with a States GST. Originally, the plan was to have a single common GST across the country to spare traders on who it is imposed from the hassles of complying with two separate tax administrations.
“The Centre should not interfere in assessment, in audit, in other matters, leaving them exclusively to States,” Mr. Rather said.
Traders with turnover less than Rs. 1.5 crore would pay their GST to States, which in turn would pass on to the Centre its share.
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States stuck to their stand on the items to be exempted from the purview of GST, reiterating that this list be a part of the Constitutional Amendment Bill itself. They also reiterated that items like petroleum and tobacco would be kept out of the GST. “So far there are 96 items in the exemption list of States for the VAT and 243 for the Cenvat,” Mr. Rather said. “It was decided that we should try to harmonise these two lists and also keep them same for the Centre and state governments”.