GST Rollout Pushed to July; Centre, States Agree to Division of Powers

Arun Jaitley. Credit: PTI/Files

Arun Jaitley. Credit: PTI/Files

New Delhi: In a breakthrough, the Centre and states today reached a consensus on sharing powers for control over taxpayers under the GST. But the new indirect tax regime will now be rolled out from July 1 instead of the previously planned April 1.

The consensus was reached after the Centre agreed to the demand of the states to go in for a horizontal split with regard to taxpayers based on annual turnover.

According to the decision reached at the ninth meeting of the GST council, states will have powers to assess and administer 90% of the taxpayers under Rs 1.5 crore annual turnover while the remaining would be controlled by the Centre.

For taxpayers with more than Rs 1.5 crore turnover, states and the Centre will control and administer them in a 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 vrst with the Centre.

He said the power to levy and collect integrated-GST, a tax on the inter-state movement of goods and services, will lie with the Centre but by special provisions in the law, states will also be cross-empowered.

The council will meet on February 18 to approve of the drafts of the IGST law and other supporting legislations needed 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.

The 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 taxpayers up to Rs 1.5 crore turnover to be with the states.

He termed 9% of the assessees being with the 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 the GST, with states continuing to seek sole control over taxpayers.

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