GST Niggles

            GST Council to discuss tax rates, dual control today

With barely a fort night left for Parliament's WinterSession, the GST Council will begin its crucial two day meeting on Thursday to decide on tax rate including the levy of rest and sort out the issueofjurisdiction over assessees.

At the meeting, to be chaired by finance minister ArunJaitley, the Centre is likely to press its proposal for four-tier tax structure of8,12,18and26 percent, the peak rate being for FMCG andconsumerdurables.

Meanwhile, Minister of State for Finance Arjun Ram Meghwal said that there had been "minor" differences over the issueof cess but expressedconfidence that itwill be resolve.

He said: "Our effort is to decideonall matters through consensus. We want everyone to come around on all issues. There may be times when Tamil Nadu or Kerala or West Bengal or Uttar Pradesh have said something different but we will get them around.

“We are confident that the GST will be rollout from April 1,2017… all issues would be sorted out before that."

The Centre has also proposed to levy additional cessondemeritgoods like tobacco, aerated drinks and polluting items to create aRs 50,000 crore fund to compensate the states for revenue loss.

The proposal, whichwasdiscussed at the last meeting, could not be adopted by the Council because ofopposition by some states.

The meeting beginningonThursday will have to sort out the issues concerning tax rate to enable Parliament to approve the Central CGST(CCGST)ardl Integrated GST(IGST)legislations in the winter session beginning Novemberl6 and pave way for roll out of the new tax regime from April next year.

Some Central officials say it is "unfortunate" thatstates areopposing the cess despite assurances forcompensatingrevenueloss for initial fiveyears.

At the last meeting, the Council agreed on keeping base year for calculating the revenue of a stateat2015-16,and considering a secular growth rateof 14 percent for calculating the likely revenue ofeach state in the firstfive years of implementation of CST.

States getting lower revenue than this would be compensated by the Centre. As some states preferred a higher tax slab over cess, Jaitley contented that the cost of fundingcompensation through an additional tax would be "exorbitantly high and almost unbearable".

Differences arose between theCentreand statesatthe last meetingondualcontrol,with states demanding control over 11 lakh service tax assessees and the Centre proposing to do away states having exclusive control over all dealers upto an annual revenue threshold of Rs 1.5crore —an issue which was settled in the firstmeeting of theGSTCouncil