This Article is From Sep 23, 2016

What's The Cut-Off Limit For GST? Debate On Council's First Meet

Arun Jaitley greeted by Puducherry Chief Minister at the First Meeting of the GST Council.

Highlights

  • Centre proposed annual turnover of Rs 25 lakh above which GST will apply
  • Some states suggested Rs 10 lakh
  • More work needed to iron out differences, said Arun Jaitley
New York: The first meeting of the GST Council -- the decision making body to implement the goods and services tax or GST - which met for the first time on Thursday, was replete with agreements, disagreements and a few compromises.

The biggest discord came over deciding a threshold over which businesses will have to pay GST.

The Centre had proposed an annual turnover of Rs 25 lakh as the cut-off. Many states supported this, with Delhi and Tamil Nadu arguing that it was needed to protect the small traders.

Uttar Pradesh, on the other hand, argued that the cut-off should be placed at Rs 10 lakh, else it would result in a loss of revenue of over 7 per cent.

West Bengal Finance Minister Amit Mitra pointed out that a higher threshold would "result in a revenue loss of about 2 per cent for every state".

Kerala said it would go with the majority in case of a vote. But bigger states like Uttar Pradesh and Tamil Nadu argued that they should be given more weightage during voting - a stance others found unacceptable.

Finance Minister Arun Jaitley - who chairs the council -- suggested a technical team of officials should meet on Friday to arrive at a consensus.

The Council also agreed to a time-table for the implement of the one market tax and framed the rules to govern the proceedings of the body. But it came after the Centre agreed to accommodate some of objections made by the states.

For example, BJP-ruled Gujarat, Congress-ruled Karnataka and Left-ruled Kerala wanted that officials be allowed to represent a state during discussions of the council. The Centre agreed to play along.

There were also objections that "there would be a roll call of the state finance ministers". As a compromise, it was agreed that a sheet would be passed around where people would mark their attendance and even the seating of finance ministers would be done as per alphabetical order of the states.

Briefing the media, Mr Jaitley admitted there were two sets of views on the threshold limit and further work is required to iron out the differences. "The beauty of our democracy is that all these differences can ultimately be reconciled," Mr Jaitley told NDTV.
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