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Ten days after notification, GST Council to hold first meeting tomorrow

The all powerful GST Council will meet for the first time tomorrow to iron out issues between Centre and states for rolling out the GST from April 1, 2017.

India TV Business Desk, New Delhi [ Published on: September 21, 2016 20:15 IST ]
GST Council will be headed by Union Finance Minister
Image Source : PTI GST Council will be headed by Union Finance Minister

The all powerful GST Council, which will decide on various provisions of the new indirect tax regime, will meet for the first time tomorrow as it races against time to iron out issues between Centre and states for rolling out the GST from April 1, 2017. 

The Goods and Services Tax (GST) Council is chaired by the Union Finance Minister and has Minister of State in charge of revenue and state finance ministers as members. 

The council is authorised to take decisions on tax rates, exempted goods and threshold of the new tax regime. 

Prime Minister Narendra Modi has directed that all steps including preparation of Model GST laws and rules, establishment of IT infrastructure for both Centre and states, training of officers of central and state governments must be completed before the government’s deadline of April 1. 

The PM had observed in a meeting last week that the GST Council would need to have intensive meetings to be able to make timely recommendations relating to its mandate provided in 279A including making recommendations relating to Model GST laws and GST rates.

The two-day meet of the GST Council beginning tomorrow is likely to take up the discussion on issues of dual control and threshold with states demanding that they be given the legal and administrative power for imposing tax on entities with turnover of up to Rs 1.5 crore. 

In their last meeting with Jaitley on July 26, states had made it clear that small businesses with turnover of Rs 1.5 crore and below should be taxed only in the hands of state. 

In the GST structure, while the states have proposed that taxpayers with annual turnover of over Rs 1.5 crore should be taxed by the Centre, which will later disburse to states their share. 

Those entities with turnover below Rs 1.5 crore would pay their taxes to states, which would subsequently pass on to the Centre its share. 

Further, the Centre has proposed that small traders having annual turnover of up to Rs 20-25 lakh can be exempted from GST, but states have demanded that the limit be kept at Rs 10 lakh. The same limit should be Rs 5 lakh for special category and NE states. 

Currently, the threshold for Value-Added Tax (VAT) is Rs 10 lakh in most states. 

Tomorrow's meeting, according to sources, is also likely to select a Vice Chairman for the Council who would be one of the state finance ministers. 

GST, which is considered as the biggest tax reform since Independence, will subsume excise and service tax, and various other local levies including VAT and octroi. 

The GST Council is likely to work out a consensus on all the key issues, including GST rate, within two months so that those can be incorporated in the CGST and IGST laws. 

The government is planning to introduce GST legislations -- Central GST (CGST) and Integrated GST (IGST) -- in winter session of Parliament in November.

The GST Constitution Amendment Bill was given Presidential nod on Septemeber 8, following which the government had notified the GST Council three days later. 

The Parliament passed the Constitution Amendment bill on August 8 following which it was sent to state assembly for their approval. 

The Centre will have to pass the Central GST and Integrated GST Bills, while the states will need to approve their respective GST legislations.

The GST is a single indirect tax that proposes to subsume most central and state taxes like Value Added Tax, service tax, central sales tax, excise duty, additional customs duty and special additional customs duty. The states will, however, be able to adopt a GST structure that is different from that recommended by the GST Council. The council recommendations will not be binding on the states.

The Bill says the GST Council will make recommendations to the Centre and the states on issues such as taxes, cess and surcharges that might be subsumed in the GST tax rate. Parliament and state assemblies have the right to accept those recommendations in their GST Bills.

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