GST Council Clears 5 Sets Of Draft Rules; Says Exempted Entities Will Pay Taxes
Government targets November 22 as the date for finalising the GST rate and other rules.
The GST Council on Friday decided that exempted entities will have to pay tax which will be reimbursed by the state or central government at a later date. The Council cleared five sets of draft GST rules, Finance Minister Arun Jaitley told reporters.
“There would be a levy of tax under the GST regime on all exempted entities. Once the tax is levied, the central government or the state government which gets that tax would then reimburse from their budget that quantum of tax to the exempted entity,” Finance Minister Arun Jaitley said at a press briefing after the Council meet.
The list of exempted entities will be decided by states and the Centre. As far as the Centre is concerned, exemptions will be given to North-Eastern and hill states, while the states will decide the specific industries or items which will be given exemptions, Jaitley, also the chairman of the GST Council said.
On reimbursing exempted entities, Jaitley said, “The Centre has given incentives to North-Eastern states. Of the tax that comes to the central kitty, 58 percent belongs to Centre and 42 percent is devolved to the states. Hence we will reimburse only 58 percent. How the remaining 42 percent will be reimbursed, that arrangement has to be worked out. I can't get 58 percent and reimburse 100 percent.”
The Council also cleared draft GST rules relating to registration, payments, returns, refunds, and invoice.
“So once the Act is passed by Parliament or by the state legislatures, as the case may be, we want the draft rules to be ready so that the rules can be notified immediately…So, we are in a state of readiness with the subordinate legislation once the Act itself is approved,” Jaitley said.
The government targets November 22 as the date for finalising the GST rate and other rules, Jaitley said.
The discussion on interpretation of service tax division of authority between the central government and state governments remained “inconclusive”, and will be taken up at the next meeting of the Council.
In the first meeting Jaitley had said that 11 lakh service providers registered with the tax department will be assessed by central tax authorities, and new ones will be shared with state authorities after their officers are trained.
The Council has changed the date of its next meeting to October 18-20 from October 17-19 on the request of some states.