GST Council to hold first meeting tomorrow

The all powerful GST Council, which will decide on tax rates, exempted goods and threshold, will meet for the first time tomorrow as it races against time to iron out issues between Centre and states for rolling out the new indirect tax regime 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 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.
(REOPENS DEL 93)

The compensation law would have the taxes subsumed and the revenue forgone by each state on account of GST rollout. It will give details on how the Centre plans to raise funds for compensating the revenue loss.
The government aims to kick off GST from April next year. The Goods and Services Tax (GST) will subsume excise, service tax, VAT and other local levies.