In its first meeting since the Union Cabinet approved its formation, the Goods and Services Tax (GST) Council will meet on Thursday to decide on long pending issues of threshold limit for applicability of the tax as well as the limit for dual control between states and Centre.
The other important aspect of rates and exemptions under the new indirect taxation regime will also come up for discussion in the meeting of the council. The government has hinted at multiple rates under GST, but a final view for a revenue neutral rate that doesn’t result in any revenue loss for states is yet to be formed. States have argued for an over 20 per cent tax rate, while Centre wants to keep it at the minimum optimal level.
A final decision, however, is unlikely in the first meeting as some states may have a different stand on these issues, officials said.
“The first meeting will focus mainly on administrative aspects of the Council. There will be discussion on rates, threshold limit and dual control but a consensus among all states may take time,” a government official said.
In their last meeting with Jaitley in July, states had demanded exclusive administrative control over on businesses with turnover up to Rs 1.5 crore but the Centre has so far not agreed to this demand. On the other issue of threshold for GST, the Centre had agreed to raise the threshold to Rs 25 crore instead of Rs 10 crore proposed in the draft GST Bill.
The Centre is rushing against time to settle its differences with states to stick to its intended deadline of April 1, 2017 for rollout of the indirect tax regime. The GST Council, which is chaired by finance minister Arun Jaitley, will also select its vice chairman (a state finance minister) in its two-day meeting.
The council will also take up the draft GST legislations of CGST and IGST.