First GST Council Meet
The GST Council, led by the Union Finance Minister and with representatives from all States, had its first meeting on September 22-23, flagging off the process of determining the nitty-gritty of the new indirect tax system and resolving differences on crucial first-principle issues.
Outcomes of meet
1. Apart from agreeing on the rules and timetable for its meetings, the Council reached a consensus on the threshold turnover for a business to be covered by the GST, Rs.20 lakh, which ensures that the new tax will not be a compliance burden for small retailers and traders.
2. It has also agreed on the draft compensation formula for States’ revenue losses and accepted industry’s rationale to subsume myriad cess levies in the GST.
3. An important signal at this juncture is the Centre’s decision to let go of the Central Board of Excise and Customs’s proposal to create dual control over the assessment of businesses with an annual turnover of up to Rs.1.5 crore and give States that power.
Experts reckon that a large number of assessees fall below this threshold. By conceding ground on this contentious issue, the Finance Minister has sent a welcome message of give-and-take.
This bodes well for the GST, where every decision has to be taken by the Council based on a majority view: the States have two-thirds voting power and the Centre has one-third. It is to be hoped that this accommodative spirit of cooperative federalism prevails.