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GST Logjam: Centre, States Fail To Arrive At Consensus Over Division Of Tax Assessees

GST meet between Centre and States remain inconclusive.



Traffic drives past pedestrians waiting to cross a road in Bangalore. (Photographer: Dhiraj Singh/Bloomberg)
Traffic drives past pedestrians waiting to cross a road in Bangalore. (Photographer: Dhiraj Singh/Bloomberg)

The Informal meet held on Sunday on Goods and Services Tax between the states and centre remained inconclusive, and no consensus could be reached on which tax authority will assess which set of assessees.

The officials of states and centre will meet on November 21 to work out the modalities which will then be taken up in the GST Council’s next meeting on November 25.

Today’s informal meeting with the state finance ministers was called by Finance Minister Arun Jaitley on Nov 4  to end deadlock on sharing of administrative control over service tax assessees under the proposed goods and services tax regime.

“The meeting has remained incomplete. Discussions will continue on November 25," Finance Minister Arun Jaitley told reporters after the meeting.

States like West Bengal, Uttar Pradesh, Tamil Nadu and Kerala have insisted on exclusive control over small tax payers whose annual revenue is less than Rs 1.5 crore for both goods and services. They are of the view that they will lose out on revenue if a vertical division is adopted.

The centre wants a vertical division of assessees and has proposed division of taxpayer base vertically in which the taxpayers are divided between the centre and the states in a fixed proportion.

“There was a view of states who were willing to have a vertical split from top to bottom with two-third taxpayers coming under states and the remaining one-third under the centre…there was also a discussion on what the fair division of assessees between states and centre would be,” Kerala Finance Minister Thomas Issac said.

“We couldn’t reach an agreement, but will continue the discussion in the next meeting on Nov 25, he added.

The states are pushing to have a horizontal division of assessees wherein taxpayers with annual revenue up to Rs 1.5 crore will be assessed by states, while the centre is exploring various models under the vertical division model, said K Pandia Rajan, Tamil Nadu’s Minister of School Education, Archaelogy, Sports and Youth Welfare.

The next GST Council meeting has to finalise four supplementary bills dealing with CGST, SGST, IGST and the compensation law.

The government aims to roll out GST by April 1, 2017 which will subsume excise, all service tax and local levies.