Conclusion of two GST Council Meetings

The Government of India is committed to implement GST by 1st April 2017. The Central Government is consistently making progress towards implementation of biggest tax reform in India.

On 12th September 2016, the Union Cabinet have approved setting up of the GST Council and its secretariat with its office at New Delhi in accordance with Article 279A of The Constitution of India.

The first meeting of the GST Council was held on 22nd and 23rd September, 2016. GST council marked consensus on some important issues:

• Exemption threshold for GST is decided to increase to Rs 20 lakh from Rs 10 Lakh as envisaged in draft GST model law.
• For Northeastern and hilly states, this exemption limit is increased to Rs 10 lakh from 5 lakhs. Northeastern and hilly states comprise 11 states i.e. Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
• It is also decided that all cesses would be subsumed into GST.
• States shall have administrative control over assessees with annual turnover of less than Rs 1.5 crore. For turnover of over Rs 1.5 crore, there will be jurisdictional assessment by cross empowerment between states and Centre leading to single interface.
• On issue of compensating states for any potential revenue loss, the GST Council suggested to take an average of revenue growth for three out of last five years excluding two outliers with suggestion of fixing base year as 2015-16.

The second meeting of GST Council held on 30th September decided firstly on area-wise & industry-wise exemptions and secondly on draft rules of GST.

• Currently, the exemption is given to various entity in 11 states in the northeast and hilly regions from excise duty. Consequently, many states gave tax incentive for setting up industry in its states. It was agreed that there would be a levy of tax under the GST system on all exempted entities. Once the tax is levied, the Central or State government, which gets that tax, would then reimburse the same to thise entities.
• The Council also agreed on five subordinate legislations i.e draft rules and formats dealing with issues ranging from registration to invoicing under the new GST regime released on 26th and 27th September. (Refer DYKS dated 30/09/2016 for details)

Going Forward, discussions on crucial rate structure for GST along with service tax assessment and the formula for calculating compensation to states would be taken up at the next meeting on 18th-20th October.

Contributed By:
Atul Kumar Gupta
B Com (Hons) FCA, FCMA, LLB, MIMA, CIQA, PGDEMM
Central Council Member of ICAI (2016-2019)