GST threshold fixed at Rs 20 lakh, rate to be decided in October

Tribune News Service

New Delhi, September 23

In its first meeting, the GST Council today decided that the annual turnover limit for exemption will be Rs 20 lakh while it would be Rs 10 lakh in the north-eastern and hill states.

The GST Council headed by Finance Minister Arun Jaitley also decided that the states will have jurisdiction over assessees with annual turnover of less than Rs 1.5 crore.

Those with turnover of over Rs 1.5 crore, there would be cross-examination either by officers from the Centre or state to avoid dual control.

However, the power for assessment of 11 lakh service tax assessees who are currently assessed by the Centre would remain with it. New assessees which would be added to the list would be divided between the Centre and the states.

Jaitley said the next meeting of the Council on September 30 will finalise draft rules on granting exemptions, the GST rate and tax slabs would be decided at its three-day meeting beginning October 17. The Council also decided that all cesses will be subsumed in the GST.

The Finance Minister said while the annual exemption threshold for levy of GST would be Rs 20 lakh, it would be Rs 10 lakh in the north-eastern and hill states.

"All items including cess would be included in the GST," Jaitley said, adding the Council is working on a compensation law and draft compensation formula.

The base year for calculating compensation would be 2015-16 and the formula for payment of compensation would be deliberated between the state and Central authorities.

The officials will give a presentation with regard to the compensation formula which can be adopted at the next meeting of the Council on September 30.

"All decisions today by the GST Council were taken on the basis of consensus," Jaitley said and added that there was no need for voting.

The traders’ body, Confederation of All India Traders (CAIT), has welcomed the fixation of threshold limit of Rs 20 lakh by the GST Council.

The CAIT said it will take away large number of small traders from the ambit of GST whose cost of compliance is much more than the cost of their livelihood earning.

According to the CAIT, it will also save the government from huge amount of administrative efforts and will allow them to focus on widening the tax base.