In a big step forward on GST implementation, the Centre and states on Friday reached an agreement on keeping traders with annual revenue of Rs 20 lakh out of the new national sales tax regime that will subsume all cesses.
While the two sides, at the meeting of the GST Council, agreed on the contentious issues of revenue threshold - below which traders will be exempted from GST, and sharing of administrative powers, the all crucial GST rates will be decided in the meeting to be held on October 17-19.
The newly constituted Council decided to keep the revenue exemption limit at Rs 20 lakh for all states with the exception of north eastern and the hill states where the limit will be Rs 10 lakh, Finance Minister Arun Jaitley said here.
Resolving issues over dual control over small traders, it decided that states will have exclusive
control over all dealers up to a revenue threshold of Rs 1.5 crore in a year. A mechanism would be worked out for traders above Rs 1.5 crore to ensure that a dealer is regulated either by the Central government or the state government and not both.
Broad principles for compensating states for any loss of revenue when the new regime is rolled out from April 1, 2017 were also discussed at the two day meeting of the panel that is headed by Union Finance Minister and includes representatives of all states.
On service tax, it was decided that in absence of expertise with states, the Centre will continue to exercise control over all the 11 lakh service tax registered dealers irrespective of their revenue levels, he said.
Jaitley said the next meeting on September 30 will finalise the draft rules regarding implementation of exemptions.
Revenue Secretary Hashmukh Adhia said the first meeting of the GST Council was a success.
Only 5 per cent of the cases will be audited under the GST regime, he said. West Bengal Finance Minister Amit Mitra said the interest of small traders has been protected by keeping threshold exemption at Rs 20 lakh.
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, he said. “We were able to protect the interest of small traders, small manufacturers and laying out of initial path of GST,” Mitra added.