GST: Interest of small businesses protected, says Amit Mitra

Hailing the decisions reached at the first meeting of GST Council, he said more than half of the 2.65 lakh businesses in West Bengal will not be paying the new indirect tax, set to be implemented from April 1.

“We were able to protect the interest of small traders, small manufacturers and laying out of initial path of GST,” he said. The two-day meeting of the GST Council passed rules which will be the first steps towards the Goods and Services Tax (GST), he said.

The meeting decided on a Rs 20 lakh threshold of annual turnover for levying GST on traders and businesses and Rs 10 lakh for North Eastern and hilly states. Stating that the VAT limit currently varies from state to state, Mitra said that for West Bengal the limit is currently at Rs 10 lakh, for Uttar Pradesh it is at Rs 5 lakh and it is only Rs 1 lakh in North Eastern states.

There is wide variation among states on current VAT threshold. “GST Council agreed at Rs 20 lakh threshold which means any dealer who has turnover of less than Rs 20 lakh will not be part of tax net. This gives huge relief to small businesses of India and West Bengal,” he said. In West Bengal, a total of 1.38 lakh business will not be paying tax out of total pool of 2.65 lakh, he said. He said the administrative cost of collecting tax is higher than the tax received. “This is a big relief.”

On dual control, he said businesses with turnover of Rs 1.5 crore annually continue to be under state control and beyond that will be dual control. “Below Rs 1.5 crore you should not have control. (They) should not face audit by both Centre and States. We didn’t want Inspector Raj,” he said.

At the end of two day discussion, Union Finance Minister Arun Jaitley agreed on Empowered Committee suggestion that any small manufacturer or trader would not be included in the dual control mechanism.

“Only states would be involved in working with taxpayers like small traders and shop keepers,” he said adding above Rs 1.5 crore turnover businesses would be governed by dual control as Centre already levies excise duty.