In a major breakthrough, the Centre and states on Monday reached a consensus on sharing powers for control over tax payers under GST but the new indirect tax regime will now be rolled out from July 1 instead of previously planned April 1. The consensus was reached after the Centre agreed to the demand of states to go in for horizontal split with regard to tax payers based on annual turnover.
According to the decision reached at the 9th meeting of all-powerful GST Council, states will have powers to assess and administer 90% of the tax payers under Rs 1.5 crore annual turnover while the remaining would be controlled by the Centre. For tax payers with more than Rs 1.5 crore turnover, states and the Centre will control and administer them in 50:50 ratio. Finance Minister Arun Jaitley, briefing reporters about the decisions taken at the meeting, said states would also have the powers to levy tax on economic activity within 12 nautical miles of territorial waters even though such rights Constitutionally vest with the Centre. He said the power to levy and collect Integrated-GST, a tax on inter-state movement of goods and services, will lie with Centre but by special provisions in law, states will also be cross-empowered.
The Council will meet on February 18 to approve of the drafts of IGST law and other supporting legislations needs for subsuming central and state levies like excise duty and service tax and VAT, he said. GST, he said, now looks realistically possible from July 1 instead of April 1 previously planned. Finance Minister said each assess will be assessed by only one authority.
West Bengal Finance Minister Amit Mitra said he dissented at the Council meeting as his state government wanted 100% of the tax payers up to Rs 1.5 crore turnover to be with states. He termed 90% of the assessees being with states as a victory to protect small traders. Earlier, Kerala Finance Minister T M Thomas Isaac said there was no agreement on the issue of administration of GST, with states continuing to seek sole control over tax payers.