GST deadlock ends; FM Arun Jaitley says dual control issue resolved, 1 July roll out likely

Union Finance Minister, Arun Jaitley, on Monday said the differences between the Centre and the state governments on the issue of dual control has been resolved, paving the way for the likely roll out of the indirect tax reform beginning 1 July of this year.

"Decision arrived at on cross empowerment and dual control issue of GST; entire taxation base to be shared between assessment machinery of Centre and states," said Jaitley at a presser in Delhi.

 GST deadlock ends; FM Arun Jaitley says dual control issue resolved, 1 July roll out likely

File image of Arun Jaitley. PTI

As per the understanding between the Centre and states, 90 percent of the GST taxpayers with up to Rs 1.5 crore turnover will be assessed by states, while 10 percent will be assessed by the government. As far as those above Rs 1.5 crore turnover is concerned, the assessment will be done on a 50:50 basis between the Centre and states.

Further, states will be empowered to tax any economic activity in territorial water up to 12 nautical miles, the FM said.

GST is the biggest indirect tax reform India has seen in decades and is expected to absolve several state level levies into one thus creating a uniform tax regime. This is expected to help the economy widen the tax base over a period of time.

Earlier in the day, it appeared that there was no consensus emerging on the issue of dual control after Kerala finance minister, Thomas Isaac said the differences still persist.

"There is no agreement. The discussions are still going on. There is no agreement as to how the taxes will be administered", Kerala Finance Minister T M Thomas Isaac told reporters. This gave a sense to the media that GST deadlock is continuing.

However, at the presser, Jaitley said all state finance ministers were now on the board over the issue of dual control except West Bengal FM. The next GST council meeting will be held on 18 February.

The Council, in its previous meeting, had agreed on most of the clauses of the draft IGST law, which along with central GST (CGST) and state GST (SGST) have to be passed by Parliament and state legislatures, respectively, before the new indirect tax regime can be rolled out. IGST deals in levy on inter-state supply (including stock transfers) of goods or services.

GST will subsume a host of indirect taxes levied by the Centre and states, including excise duty, VAT, service tax, entry, luxury and entertainment levies.

Parliament passed the landmark constitutional amendment in August last year and more than half of state legislatures ratified it by mid-September.

According to Jaitley, GST needs to be rolled out latest by September 16, 2017.

Under the Constitutional Amendment passed by Parliament for GST implementation, some of the existing levies will expire after September 16.

GST is expected to transform India into a single market, boost revenues through better compliance and simpler procedure.

With PTI inputs

Updated Date: Jan 16, 2017 19:14:12 IST