Centre sticks to its guns over dual control of GST

The Centre is firm on its stand of dual administrative control over entities with annual turnover of up to ~1.5 crore a week before the first meeting of the Goods and Services Tax Council.

States want sole powers to assess, scrutinise and enforce the GST on entities with annual turnover of up to ~1.5 crore and dual control above that. The Centre wants dual control all through or exclusive control beyond the ~1.5 crore limit.

Finance ministry officials argue that dual control is vital because the Centre is accountable to Parliament for its share of the tax. “Tomorrow, if Parliament asks why the tax base is not increasing, the Centre will be unable to answer. And states may say they have an elected body to whom they are answerable,” an official said.

The matter is among three key issues facing the GST Council, and if unresolved could prove to be a hurdle for the April 1 rollout of the tax. The other two issues are tax rates and geographical exemptions. The first GST Council meeting is scheduled on September 22-23 and will thrash out these issues. The council will be chaired by Finance Minister Arun Jaitley and will have representatives from states.

States have two-thirds of voting rights in the council and the Centre the rest. Any proposal needs three-fourths majority to be passed by the council.”If it is a tax where the money will go to two different governments, they both must have the ability to administer it,” said an official.

Finance ministry officials argue that dual control is vital because the Centre is accountable to Parliament for its share of the tax