The Centre and States have agreed to have a common exempted list for at least 96 goods under the proposed Goods and Services Tax (GST) regime.
The consensus was reached on the first day of a two-day meeting of State finance ministers here.
“Overall, we have moved forward. We have moved positively,” the Chairman of the Empowered Committee of States’ Finance Ministers Sushil Kumar Modi told reporters after the conclusion of the first day’s meeting.
However, going by the current political situation, he also sounded a note of caution. “This is an election year. I do not know to what extent the Centre will be able to take decisions,” said Modi, who belongs to the BJP.
The meeting discussed the final report of the sub-committee on the exemption list, as well as the threshold limit for GST registration by traders. The sub committee recommended a common list of exempted goods for both Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST).
At present, 96 items are in the exempted category of goods for Value Added Tax (VAT), while the Centre has exempted 243 items from Central excise.
“Now, the Centre will bring down the list of exempted items from 243 to at least 96. That will be done in phases, so that we can have a common list of exempted goods for GST,” Modi said. Since service tax is imposed by the Centre, there is nothing called a common list.
There is also an agreement over the limit of Rs 1 crore and 0.5 per cent floor rate for the compounding scheme.
Compounding allows a trader to pay minimum tax, but not get tax credit.
At present, various States have a limit ranging between Rs 40- Rs 50 lakh, with rates of tax of 0.25 to 0.5 per cent.
The sub-committee suggested a limit of Rs 60 lakh, but the Madhya Pradesh Government suggested that since the limit under Income-Tax Act in Rs 1 crore, it should be same for the composite scheme. It was also agreed to have no threshold for inter-State trades.