Centre lists its objections on GST draft paper

The views of the Centre and the states dont seem to be in congruence regarding the modalities of the Goods and Services Tax....

The views of the Centre and the states dont seem to be in congruence regarding the modalities of the Goods and Services Tax. The Centre wants a common threshold for both goods and services and a single rate for the Goods and Services Tax. Also,it wants the electricity duty,purchase tax to be subsumed in the GST along with bringing in goods like natural gas,alcohol,diesel and petro products in the ambit too.

These are a few among various other comments and objections the Centre has raised on the first draft discussion paper released by the Empowered Committee of State Finance Ministers regarding the Goods and Services Tax (GST). The Centre is likely to send it soon to the Thirteenth Finance Commission,which is going to submit its report by December 31.

The Centre has clearly stated that the new indirect tax regime would not be possible without a single threshold for both goods and services and the threshold could be anywhere between Rs 10 lakh and Rs 50 lakh,official sources told The Indian Express.

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In the discussion paper,the Empowered Committee (EC) had suggested a threshold of gross annual turnover of Rs 10 lakh both for goods and services for all the states and Union Territories . Further,the draft said,Keeping in view the interest of small traders and small scale industries the threshold for Central GST for goods may be kept at Rs 1.5 crore.

The Centre has further said that there should be a common exemption list between the Centre and states while taxes like purchase tax and electricity duty should be covered under the GST.

According to the sources,the industry is also of the view that all taxes should be subsumed in the GST and all the goods and services should be brought under the GST net,in the absence of which they will not get the input tax credit,thereby increasing their cost monumentally. Also,states like Maharashtra and Gujarat,which are home to a large number of industries,have also aired the same opinion in the various meetings held so far.

The Centre in its meeting with the EC in January is likely to communicate on similar lines,the sources added.

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Further,the Centre has said it wants a final view on intra-state services with regard to issues like the point of supply rule,that is to say,the place where the sales occur.

Also,simplification of the registration,return filing and e-payment facility has also been sought by the Centre. The Centre has proposed that both the state GST and Central GST on imports should be handled by it as it would become administratively and constitutionally impossible for the states to do on their own.

The EC will meeting the finance minister on January 8 to discuss the issues related to the implementation of the GST,which would remove the cascading effects of taxes and subsume all central and state levies.