By: Priyanka Yadav
The Goods & Services Tax (GST) Council
has decided that businesses in the Northeastern and hill states with annual
turnover below Rs.10 lakh would be out of the GST net, while the threshold for
the exemption in the rest of India would be an annual turnover of Rs.20 lakh.
The Constitutional Amendment paving the
way for the GST has a provision to accord special status to the Northeastern
and hill states.
Is it good ?
“A higher threshold of Rs.20 lakh [as
against earlier proposed limit of Rs.10 lakh] is also a good news,” Rajeev
Dimri, Leader, Indirect Tax, BMR Associates, said in an e-mailed statement.
“Many small scale traders and service providers would be saved from undertaking
GST compliances and it also reduces a substantial burden for tax authorities to
assess small time dealers.”
Other decisions
·
Mr. Jaitley said the
Council had also reached consensus on another contentious issue, that of
administrative control over indirect tax assessees.
·
The States would have
sole jurisdiction over assessees (currently in the Value Added Tax [VAT] net at
present) having a turnover of Rs.1.5 crore or less, while the administrative
control of businesses with a turnover exceeding that limit would be jointly
with the Central and State governments, Mr. Jaitley said.
·
The Council also decided
that the existing 11 lakh service tax assessees will continue to be under the
jurisdiction of the Centre. Since the GST will allow the States to also tax
services, over time the revenue officials in the States will be trained after
which they will begin assessing assessees in the services sector.
·
“Retention of
administrative control over existing Service Tax assessees by Central
authorities highlights an open mindset to facilitate smooth transition to GST,”
Mr. Dimri said.
The Council would reconvene on September
30 to finalise the categories of goods and services that would be exempt from
the GST. After that, it would meet on October 17, 18 and 19 to fix the slabs
and rates at which the GST would be paid by consumers, Mr. Jaitley said.
Compensation formula
The compensation that the Centre would pay
to the States for losses of revenue because of the transition to the new regime
would be routinely, quarterly or bi-monthly, Mr. Jaitley said. The Council
agreed to settle for 2015-16 as the base year for calculating the compensation.
On Thursday, Tamil Nadu called for
ascertaining the quantum of compensation based on the average growth rate in
the best three of the preceding six years. A formula would be set based on suggestions,
Mr. Jaitley said.
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