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With the President’s seal of approval on the 122nd Constitutional amendment bill, the GST council was promulgated. It comprised of the union finance minister as its head, the union minister of state for finance, and state finance ministers as the prominent members. The GST council is expected to take decisions on a number of critical items before the beginning of the winter session of Parliament. The Centre and state governments will also table the IGST, CGST and SGST laws in the winter session. These laws coupled with the sensitive outcomes of the GST council meetings will pave the way for the implementation of GST from the 1st of April, 2017.

The first meeting of the GST council was conducted on the 22nd and 23rd of Sep, 2016 where some key decisions were taken. These are listed below:

  • The businesses with a turnover of less than INR 20 lakh are exempted from GST. This threshold limit is INR 10 lakh for the north-eastern states.
  • The taxation control would vary depending on the turnover of the business and whether it is goods or services which are to be taxed.
  • For goods, the business with a turnover of less than INR 1.5 Crore per annum will be taxed by the states. Where the turnover is greater than INR 1.5 Cr both the centre and states will both have the taxation control.
  • For the service-tax-assesses the GST will be imposed by the Centre and the revenues collected would be judiciously distributed to the states.

The outcome of the first meeting was very encouraging and people were impressed by the speed with which the government was acting. However, the expectations were short-lived as cracks appeared in the second GST council meeting held on 30th Sep 2016. The discord was visible when the minutes of the first meeting were put up for approval in the second meeting. Two states did not agree to the Centre’s jurisdiction of taxing the 11 lakh service tax assesses. Had the Finance minister taken the voting route, the MOM would have been approved by now but he has chosen to go with the consensus route. A discussion was initiated on the subject but it remained inconclusive.  This discussion will now continue in the next meet on 18th Oct 2016.

In the second meeting, the following two decisions were taken-

  • An agreement was reached on five subordinate legislations which include rules for registration, rules for payments, returns, invoices and refunds.
  • GST tax would be paid by all entities and exemptions would be phased out. Currently, the Centre has given some excise duty exemptions to 11 north-eastern and hill states. Similarly, the state government also gives the exemptions. The GST that will be collected by the state or centre would be reimbursed to the exempted entity from its budget.

The third meeting is crucial in nature as the all-important GST rate will be decided in it. The formula for compensating the states in case of a revenue shortfall resulting from GST implementation would also be worked out. The government has set the target date of 22nd Nov 2016 for finalising the tax rate, exemptions and draft legislation by the council.

source:http://www.onlinegst.in/gst-council-decisions-taken-till-now/

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