Key highlights of the GST Council Meet on 22 and 23 September 2016
With presidential assent granted to 122nd Constitutional Amendment Bill, 2014 (CAB) on 8 September 2016, the government in consonance with Article 279A of the Constitution of India, approved the creation of a GST Council and its Secretariat effective 12 September 2016. Pursuantly, the composition of the GST Council was notified on 15 September 2016 which included the Union Finance Minister as the Chairperson and the Union Minister of State in charge of Revenue or Finance or any of its nominees as the members of the council.
The GST council, a constitutional body formed to make recommendations to the centre and state on the matters such as rate, classification, exemption, threshold limits, taxes to be subsumed, etc. had completed its first meet on the 22 and 23 September 2016.
Some of the key points discussed during the meet along with the consensus (if any) are:
- Threshold limit to be set at INR 2 million per annum. In respect of north eastern and hilly states the limit to be set at INR 1 million per annum. If the supplier’s turnover is less than the given threshold limit per annum, then he will be out of the ambit of GST levy.
- All cess would be subsumed in GST. Thus, Swach Bharat Cess, Krishi Kalyan Cess, etc. which are currently imposed on specific taxable events, would also be subsumed under the GST regime.
- Traders with gross turnover of upto INR 5 million have an option to pay 1-2% GST under compounding or composition schemes under GST regime.
- Assessees having turnover below INR 15 million to be assessed by state officials and those above INR 1.5 million to be assessed by officials of the state as well as the centre. 1.1 million service tax assesses will continue to be assessed by the officials of the centre. The state officials would be gradually trained for assessing the existing service tax assessees.
- The compensation law and draft compensation formula for states would be decided subsequently. The base year for calculating compensation for states would be FY 2015-16. Furthermore, the method of increasing the revenue projection for computing the compensation would be deliberated between the state and central authorities.
The next meeting of GST Council is scheduled on 30 September 2016 with an agenda to decide on the draft rules and exemptions to be granted under the GST regime. Rates and Tax slabs will also be taken up during the three-day GST council meet scheduled for 17-19 October 2016.
- Furthermore, keeping in mind the implementation date 1 April 2017, the GST Council on 22 September 2016 agreed on a timetable for deciding the tax rate and completion of legislative work.