GST snippets

The states may be taking a hard stand publicly, but behind the scenes the Centre has managed to make up substantial ground on the proposed goods and services tax (GST). A large number of states have acceded to the Centre's proposal on a higher annual turnover threshold of Rs.25 lakh aimed at giving relief to small and marginal traders and shopkeepers, raising hopes for early finalisation of the new tax framework The empowered committee of state finance ministers had originally pitched for Rs.25 lakh as threshold but later changed its stance after a few states such as Rajasthan and Tamil Nadu favoured a Rs.10 lakh limit.
This would have meant that any goods seller or service provider with an annual turnover Rs.10 lakh would be liable to pay of the tax. That would bring 60% of traders in the tax net but only end up contributing just 2-3% of revenue, significantly increasing the administrative burden as well as the cost of collection.
North Block had written a letter to the panel asking it to review the stance but decided against raising the threshold at its last meeting. But backroom talks with states have yielded results and this augurs well for the new tax structure.The Centre currently levies excise duty above a turnover of Rs.1.5 crore and states levy value added tax on a turnover of Rs .0 lakh or lower. Service tax is levied on an annual turnover above Rs.10 lakh.
The Centre is keen that small shopkeepers, traders and hawkers do not have to face any hard ship under the new tax regime.
Tax experts concur with this view, saying a lower threshold will make administration of the new regime very difficult.
GST seeks to replace a multitude of indirect taxes with one, removing barriers to the movement of goods and services across state boundaries and turning the country into a single market.
The framework was originally scheduled to be rolled out from 2010 but has been stuck due to differences between the Centre and the states.