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GST threshold fixed at Rs 20 lakh, rate to be decided in October

Currently reading: GST threshold fixed at Rs 20 lakh, rate to be decided in October
India TV Business Desk, New Delhi [Published on:23 Sep 2016, 17:30:53]

In its first set of decisions, the Goods and Services Tax (GST) Council headed by Union Finance Minister Arun Jaitely today fixed the turnover-based exemption limit from such levies at Rs 20 lakh, but left the decision on fixing the actual tax rates and the finalisation of draft rules for later.

At the next meet slated for September 30, the Council will finalise draft rules on granting exemptions, the GST rate and tax slabs would be decided at its three-day meeting beginning October 17. 

At the end of the first meeting, decided that the state authorities will have jurisdiction over assessees with annual turnover of less than Rs 1.5 crore. 

Those with turnover of over Rs 1.5 crore, Jaitley said there would be cross examination either by officers from the Centre or state to avoid dual control. 

However, the power for assessment of 11 lakh service tax assessees who are currently assessed by Centre, would remain with it. New assessees which would be added to the list would be divided between the Centre and states. 

Talking to reporters after the meeting, Jaitley said while the annual exemption threshold for levy of GST would be Rs 20 lakh, it would be Rs 10 lakh in the north-eastern and hill states. 

"All items including cess would be included in GST," Jaitley said, adding the Council is working on a compensation law and draft compensation formula. 

The base year for calculating compensation would be 2015-16 and the formula for payment of compensation would be deliberated between the state and Central authorities. 

The officials will give a presentation with regard to the compensation formula which can be adopted at the next meeting of the Council on September 30. 

"All decisions today by the GST Council were taken on the basis of consensus," Jaitley said.

Jaitley said the general consensus at the GST Council meeting was that the compensation to be paid to states for any loss of revenue because of implementation of the new regime, should be at regular intervals. 

"It should be quarterly or bi-monthly," he said, adding the base year for calculating the compensation will be 2015-16. 

Also, there were suggestions on the method of projecting the increase in revenue in the next five years, he said. 

"We have taken 3-4 suggestions that have come in, and officers meanwhile will discuss this and therefore in the future which of the various options is the best option," he said, adding there was an option that best three out of past five years is selected. 

Another suggestion was on a fixed rate of revenue growth and give compensation, he said. 

"It was decided as far as the exemption threshold is concerned it is fixed at Rs 20 lakh. So those with a turnover of 20 lakh are exempted from GST," Jaitley said. "For North Eastern states, this exemption limit is is fixed at Rs 10 lakh." 

Decision was also taken on including all cesses in the revenue. "That is how the term revenue will be defined," he said. 

On dual control, the finance minister said it was decided that assessees with less than Rs 1.5 crore turnover annually will be assessed by states. "Above 1.5 crore is concerned, there will be some dual control, and cross empowerment of the officers of Centre and state." 

"Which assessee is assessed by whom will be decided on the basis of a formulation mainly the risk assessment by the Centre and state, and which of two authorities has a higher risk assessment will assess it. How the control will change officers will assess it," he added. 

Revenue Secretary Hashmukh Adhia said the first meeting of the GST Council was a success. 

Only 5 per cent of the cases will be audited under the GST regime, he said.

The central government is trying to resolve all outstanding issues over the uniform pan-India indirect tax regime at the earliest in a bid to meet deadline for its implementation from April 1, 2017.

Wit PTI Inputs

Arun Jaitley - India Tv
Arun Jaitley