States stick to ₹10-lakh threshold limit for GST

The Empowered Committee of State Finance Ministers has turned down the Centre’s call for raising the threshold limit for Goods & Services Tax (GST).

But the States are optimistic that the new tax reforms will be introduced from April 1, 2016.

GST is the new indirect tax regime which will subsume several taxes and duties at the Central and State level.

The Committee, headed by the Finance Minister of Jammu & Kashmir, Abdul Rahim Rather, which met on Tuesday, discussed a letter from the Department of Revenue, Union Finance Ministry, for raising the threshold annual turnover for levying GST from the proposed ₹10 lakh (for general category States) and ₹5 lakh (for special category and North-Eastern States).

Rather said: “The Centre has suggested that this limit should be ₹25 lakh.

“Even if it is not ₹25 lakh, it still should be more than ₹10 lakh. It was again discussed today, but the Committee decided to stick by its earlier decision.”

The Committee, at a meeting on August 20, agreed on a threshold limit of ₹10 lakh and ₹5 lakh.

Rather, however, said the issue of the threshold limit will come before the GST Council.

Once the Constitutional Amendment Bill is placed in Parliament, within six months the GST Council will be constituted and empowered to fix the threshold limit.

Though the Centre aims to incorporate views of the States in the Bill and get it passed in the Winter Session of Parliament, which starts on November 24, Rather said that “the Committee is yet to receive the draft of the Bill.” “As soon as it is sent to us, we will discuss and give our comments. Because of the Committee it will not get delayed,” he said.

The Committee reiterated its stand of keeping petroleum products, alcohol and tobacco out of GST.

Although the Centre and States seem to agree on excluding alcohol and tobacco, on petroleum products the Centre has proposed inclusion at ‘nil’ rate so that both Centre and States can levy duty.