The first meeting of the newly constituted GST Council saw a wide consensus on the timetable for deciding on the tax rate and completion of legislative work for the Goods and Services Tax (GST).
The Council, headed by finance minister Arun Jaitley and representatives of all the 29 states and 2 union territories, discussed draft rules regarding the GST and the threshold for exemption and compensation norm.
The timetable has been set keeping April 1, 2017, deadline in mind, the finance minister said in a briefing to media.
"The target also involves the passage of CGST and IGST law at the central Parliament and then by the state legislatures the state GST law in the winter session itself," Jaitley said.
Jaitley expressed hope that all outstanding issues will be resolved in the next two months time, till November 22.
There was a disappointment for states like Tamil Nadu and Uttar Pradesh which demanded a larger say than the one-state-one-vote principle that puts a smaller state on equal footing with a large manufacturing one. The Council overruled their demand.
There were varied opinions on the turnover limit for exemption from the new tax, with the majority in view of a higher limit.
While some states demanded traders with a turnover of Rs 10 lakh or less be exempted, a large number, including Delhi, were in favour of the limit being fixed at Rs 25 lakh in a year.
The tax collection from traders will be just 2 percent of the total tax collection.
The Council arrived on a consensus on compounding or composition scheme which decided that traders with a gross turnover cut-off of Rs 50 lakh will pay 1-2 per cent tax, Revenue Secretary Hasmukh Adhia said.
It provides for an easier method of calculating tax liability and it allows an option for GST registration for dealers with turnover below the compounding cut-off.
"With regard to composition we have finalised our proposal which has been unanimously accepted by the members. With regard to the threshold for exemptions, there are two sets of suggestions which have come. We have converged to those two different views and both on officers and ministers track we will continue the meeting tomorrow and thereafter so that we are able to converge to one particular figure as far as the exemptions are concerned," Jaitley said.
The Council will continue the discussion on provision for cross empowerment on Friday. It will also take up the issue of GST rate in its subsequent meetings.