New Delhi: The Centre is not keen on letting the states have exclusive jurisdiction over imposing goods and servicestax (GST) on entities with turnover of up to Rs 1.5 crore, setting the stage for a likely confrontation at the first meeting of the GST Council on Thursday.
Sources said the Centre is of the view that nearly 90% of the entities under the Rs 1.5 crore threshold would be from the services sector, where the states have virtually no experience. In addition, by giving up exclusive charge over these entities, the Centre would not be able to monitor properly.
States such as West Bengal are insisting that Centre should allow them to have exclusive jurisdiction over small units in the new regime as it would be simpler from the administration point of view and also reduce burden on the entities. The issue is listed on the agenda for the two-day GST Council meeting starting Thursday.
The GST rates and the list of exempted goods and services are seen as other possible flashpoints, although the Centre has agreed to raise the threshold for taxation to Rs 25 crore instead of Rs 10 crore proposed in the draft GST Bill.
The agenda note circulated to state finance ministers has also given the modalities and compensation formula and has suggested that the base year be fixed as 2015-16. The average for three years — 2013-14 to 2015-16 — will be calculated and linked to the base year. The difference between the actual collections and the base year will be the compensation that the Centre will pay to the states. The Centre has committed to compensate states for revenue losses for the first five years of GST rollout.
The agenda has also provided the proposed calendar, starting with the inaugural meeting of the Council, where the rules will be finalised and the details of electing a vice-chairman, who will be a state finance minister. The time table has suggested that the three draft Bills — India GST, Central GST and State GST — will be cleared this week and their passage by Parliament is likely in December.