First Meeting of GST Council Held in Vigyan Bhawan on 22 September: Centre, States

The Centre and the States failed to reconcile their differences on the issue of the threshold for exemption of businesses under the Goods & Services Tax regime, at the first meeting of the GST Council. The second meeting will be on the weekend of 30 Sept in Delhi.

It seems that the States will have full jurisdiction over GST (CGST and SGST) Collections in cases upto Rs.1.5 crs while the higher value cases will be handled by the Centre. Similarly, All Service Tax collections will be handled by Centre by the Service Tax Establishments.

“We will continue discussions on Friday and try to reach a consensus on the threshold,” said Finance Minister Arun Jaitley, who is also the head of the Council. However, on three other aspects - the rules and timetable of GST Council meetings, and the compounding procedure - consensus was reached, he added.

The agenda for the meeting suggested that the threshold for exemption should be Rs. 25 lakh, but some States want a lower limit. “There is a division of opinion on the issue. In Delhi, we want the threshold to be Rs. 25 lakh as otherwise small businesses will get impacted,” said Delhi Deputy Chief Minister Manish Sisodia.

Andhra Pradesh Finance Minister Yanamala Ramakrishnudu made a case for the exemption threshold to be pegged at Rs. 10 lakh.

Kerala Finance Minister Thomas Isaac said that the GST Council should function democratically and respect the rights of States.

States such as Andhra Pradesh, Uttar Pradesh and Tamil Nadu are understood to have sought voting rights in the GST Council in proportion to States’ representation in Parliament, but this did not find wider acceptance. Other States, including Kerala, wondered whether the GST Council Vice- Chairperson should be selected by consensus or elected.