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GST Reaches Agreement on Dual Control and Territorial Jurisdiction

1 July Roll out on the Cards

Draw of Lots To Decide Who Gets the Big Accounts!!

GST Council during its ninth meeting held on 16 January 2017 appears to have reached consensus on two most contentious issues namely, dual control and territorial jurisdiction.

Key outcomes of the meeting are:

· On dual control-

· Assessees with turnover less than INR 1.5 Crore will be assessed by Centre and States in the ratio of 10:90 respectively,

· Assessees with turnover exceeding the above limits shall be assessed equally, i.e., 50:50 ratio, through computer programming.

· Assessments in conflict between the States with reference to Place of Supply will be taken up by the Centre.

· Power to levy and collect IGST will remain with Centre, but by special provision in the law, States shall be cross-empowered through mechanism to be decided.

· Area of 12 nautical miles into the territorial waters will be under Central administration. However, States can collect tax on economic activities carried therein.

Drafts of supplementary GST laws are proposed to be discussed and approved by the GST Council in its next meeting scheduled on 18 February 2017.

As per the Finance Minister, 1 July 2017 shall be a “realistic timeline” for GST roll out.

GST Council had earlier met on 3 - 4 January 2017 and discussed the draft Integrated Goods and Services Tax (IGST) Law. However, the two issues relating to dual control and territorial jurisdiction remained inconclusive.

The Government has also indicated introduction of final laws by mid-February and rates by March. It would be relevant to see whether a concrete timetable would be laid out in the Budget. Deferring GST implementation to July 1, would give a much needed 3-month time frame to the industries to make changes to their IT systems.

The positive development in the meeting of GST Council has eased the apprehensions around GST roll out which now looks certain. Rescheduling of GST implementation by three months will help the Industry to gear up and be GST ready from the perspective of understanding IT requirement and transitioning.