It’s not just fixing of rates that appear to be a knotty area in the way goods and services tax (GST) will be implemented, issues such as IGST (Integrated Goods and Service Tax) in inter-state trades and fixing the registration threshold will also become sore points in the coming days, said Amit Mitra, chairman of the GST committee, who is also the finance minister of West Bengal.
Since the GST rates will be fixed by the council, Mitra said the empowered committee has to also sort out issues such as IGST and threshold. Mitra said he received calls from state finance ministers expressing concerns over the amendments related to IGST and SGST (State Goods and Service Tax).
“We have overcome the first bottleneck, but it is a long process. Now it is a Revenue Neutral Rate, but we have to have an optimal rate because in India we can neither have a minimal nor a maximal rate. Rates should not adversely affect the common man and there has to be a protection for fiscal capacity and stability of the states,” Mitra told ET.
The minister, however, appeared more worried about the IGST issue than rates. Calling the IGST issue a potential crisis if not addressed properly, he said it turned out to be one of the ‘serious concerns’ of the committee as well. It is learnt that chairman of the empowered committee has shot off a letter to finance minister Arun Jaitley hours before the bill was placed in Rajya Sabha, suggesting that the government should ensure that states are authorised to administer GST on supplies in the course of inter-state trade and commerce. The committee raised the issue that states are not being given any powers of administration and enforcement in IGST, which will impact their collection under SGST.
Mitra also flagged off the subject of registration threshold for states.
Explaining that the registration threshold is likely to be around 10 lakhs, he said it will again be discussed in the meeting as Delhi’s threshold is much more — 20 lakhs — while some states have more than that as their threshold. “Apart from the rate, there are several other issues that need to be addressed. The entire economics of the country will change. We have started confidence building measures among states and they were assured that there won’t be a revenue loss for them. But we have to have a holistic approach towards the states’ concerns,” said Mitra.
Harping on the dual control issue, he said that the nature of dual control will be decided by the council, though there is already a structure in place for that.
However, there should not be dual control for businesses whose turnover is below Rs 1.5 crore.