GST Council divided over rate structure, dual control * 3-day meet ends inconclusively ahead of schedule
Unable to cobble together an agreement on two crucial issues of the proposed goods and services tax (GST), rate structure and jurisdiction over tax assessment in different revenue brackets, the three-day GST Council meeting on Wednesday ended inconclusively – a day earlier than scheduled.
This may well disturb the intent of the finance ministry to get the draft pieces of legislation for the Central GST (CGST) and Integrated GST (IGST) introduced in the winter session of Parliament beginning November 16.
It could also delay the implementation of the unified indirect tax from April next year.
MS Mani, senior director, indirect tax, Deloitte India, told DNA that the council needs to have a consensus on all issues as the delay was reducing the time for corporate houses to prepare for the new indirect tax. "India Inc would be happier if the date for the rollout was pushed by six months to October (instead of April) next year, which is more realistic," he said.
On Day 2 of the council meeting, there was utter confusion and differing voices even as all members said that they were working together to build a consensus on various issues. The council is headed by Union Finance Minister Arun Jaitley and is represented by ministers from all states.
Haryana Finance Minister Abhimanyu Singh Sindhu said: "It's taking a lot of time, but the overall intent is to have a consensus and we do not have any dissent whatsoever. If at all there are different voices, we would like to discuss and deliberate upon it."
He was hopeful that the two contentious issues would be sorted out in two weeks. Jaitley said that the next two meetings would be held on November 3 and 4 and November 9 and 10.
The Union government has proposed a four-slab rate structure, with two standard rates of 12% and 18%. It has suggested a lower rate of 6% for essential goods and a peak rate of 26%. It is also looking at levying a cess on luxury goods such high-end cars, tobacco, paan masala, aerated drinks and others.
The cess would be used to compensate states which would lose revenues due to GST. It wants to tax gold at 4%. Talking to the media after the meeting, Kerala Finance Minister Isaac Thomas said that GST rate structure and cross-empowerment defied consensus. He also said that rate structure needed fine-tuning. "The peak rate of 26% will have to go up," he said.
The council has decided that states will enjoy exclusive control over all dealers and traders with annual revenues of up to Rs 1.5 crore. However, it is yet to decide on who would have control over assessment of businesses above Rs 1.5 crore.
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