States want lower threshold of ₹10 lakh for agreeing to GST

NEW DELHI: The empowered committee of state finance ministers on Wednesday came to an agreement on a lower threshold limit of ₹10 lakh for the nationwide goods and services tax (GST) , against the ₹25 lakh proposed by the Centre, and sought legal powers for states to collect tax from businesses with annual turnover of up to ₹1.5 crore.

The committee, which met Wednesday to discuss the roll-out of GST, also asked the government to outline the compensation structure for five years and highlight it in the Constitutional Amendment Bill.

“So far as the shape of GST is concerned, we have made recommendation to the government after the last meeting… the government has not responded yet,” said Abdul Rahim Rather, chairman of the empowered panel.

“States also insisted that legal powers should be given to them to the extent of ₹1.5 crore threshold so far as central GST is concerned,” he added. States would subsequently pass on to the Centre its share.

For those with annual turnover of over ₹1.5 crore, taxes would be levied by the Centre, which will later disburse to states their share.

The panel also proposed to keep products such as petroleum, tobacco and alcohol out of GST’S ambit and said that the exemption list should be mentioned in the Constitutional Amendment Bill.

“So far, there are 96 items in the exemption list of states so far as value-added tax (VAT) is concerned and so far as Cenvat is concerned there were 243 items. It was decided that we should try that this list should be harmonised and it should be same so far as central and state government is concerned,” Rather said.

Finance minister Arun Jaitley had earlier said that significant progress has been made towards rolling out of GST. The bill is expected to be ready by the winter session of Parliament.

GST ROLLOUT COULD LIFT INDIA’S GDP GROWTH BY 0.9-1.7 PERCENTAGE POINTS, A STUDY BY THE NCAER HAS FOUND. INDIA’S GDP GREW BY 4.7% IN 2013-14