GST meet: States to press for exclusive control on small biz

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Jaitley has called for a political meeting on November 20 to discuss two options — horizontal and vertical division of taxpayers. Division based on turnover and nature of business, which was considered in the GST Council meeting on September 22 and 23, remained inconclusive.

Under this option, it was proposed that taxpayers dealing in goods below the turnover of Rs 1.5 crore shall be dealt only by states and those with turnover above Rs 1.5 crore, by both states and the Centre. Also, the proposal was that to begin with, service tax would be administered by the Centre alone as the state officials needed training in this field.

However, it was later recognised that this arrangement causes a divide between goods and services and also created jurisdictional problems for those suppliers who had a substantial mix of supply of both goods and services.

Also, with fresh data, it came to the states’ notice that the number of service tax assessees over 30 lakh, compared with 11 lakh flagged by the Centre.

The next meeting of the GST Council headed by Jaitley is scheduled for November 24-25. The Centre prefers to have in place a vertical division. It feels that horizontal division would be lopsided as 93 per cent of service tax assessees and 85 per cent of VAT taxpayers have a turnover below Rs 1.5 crore. FE