The Empowered Committee of State Finance Ministers is yet to agree on a common threshold limit for traders to be registered as well as for dual control on traders.
At present, traders with annual turnover of over Rs 5 lakh are required to be registered with the State Commercial Tax Department. Earlier, the Empowered Committee had suggested raising this limit to Rs 10 lakh. Keeping inflation in mind, the sub-committee has now recommended raising this limit to Rs 25 lakh.
However, there was no agreement on this. Some States feared that if there was a threshold limit of Rs 25 lakh, nearly 65 per cent traders would be out of the tax net.
Some small States such as Uttarakhand and Himachal Pradesh and the North Eastern States feel that there are very few traders in their States with over Rs 25 lakh annual turnover. The Empowered Committee will now discuss the matter again.
However, one thing is clear. “The threshold limit will be more than Rs 10 lakh but less than Rs 25 lakh,” the empowered committee head, Sushil Kumar Modi, said, adding that States had been asked to give their views on raising the threshold limit for registration under service tax to Rs 25 lakh from Rs 10 lakh at present.
The States tax trade, while the Centre taxes manufacturing. With this, a trader, with annual turnover of over Rs 5 lakh needs to file returns with the respective State Government.
An manufacturer with annual turnover of more than Rs 1.5 crore needs to file returns with the Central Government.
The sub-committee has recommended that under GST, a trader with a turnover up to Rs 1.5 crore should be controlled by the State Government, while those with a turnover above Rs 1.5 crore should be controlled by both the States and the Centre. There is no agreement yet on this, too.