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GST threshold fixed at Rs 20 lakh

Goods and Services Tax rate to be decided in October

Policy Pulse
Publish Date: Sep 24 2016 10:22AM | Updated Date: Sep 24 2016 10:22AM

GST threshold fixed at Rs 20 lakh

The Centre and states made progress on the goods and services tax by taking several important decisions on the levy at the first meeting of the GST Council. Expectations rise that the government will be able to meet an April 1, 2017 deadline for its rollout. 


The two-day inaugural meeting of the council, consisting of state and central representatives, discussed the rules and eventual rates of GST. The council will meet next on September 30 to finalise things and subsequently on October 17-19 to thrash out the rates. 


Given that views among the states and the Centre vary widely on rates, that meeting saw some tough negotiations. The government doesn't want to set the rate too high as that could be inflationary and make it a harder sell, while states are wary of losing too much revenue with a low rate. 


The council also agreed to an exemption threshold of Rs 20 lakh for all states barring the north-east and hill-area states. It also adopted a cross-empowerment model for tax administration, a formula for compensating states and agreed to subsume all cesses into the new tax. 


"All decisions were taken by consensus at the first GST Council meeting spread over two days," Finance Minister Arun Jaitley told media after the meeting ended. "We did not require voting on any issue." Jaitley, who is chairman of the council, said significant progress had been made on all agenda items.