GST: Consensus eludes on jurisdiction over assesses

The informal meeting of Union Finance Minister and his state counterparts was called to break the political deadlock on sharing of administrative control under the proposed goods and services tax (GST) regime. “The meeting has remained incomplete. Discussions will continue on November 25,” Finance Minister Arun Jaitley told reporters after the meeting. 

Sunday’s meeting, which came ahead of the formal meeting of the all-powerful GST Council on November 25, was held after the Centre and states were deadlocked over the issue at two previous meetings. The government aims to roll out GST, which will subsume excise, service tax and local levies, from April next year. Officers of both Central and state governments will meet on Monday and try to find a solution.

States like Uttarakhand, West Bengal, Uttar Pradesh, Tamil Nadu and Kerala have insisted on exclusive control over small businesses, which earn less than Rs 1.5 crore in annual revenue, for both goods and services. They feel states have infrastructure deployment at grassroot level and small taxpayers are familiar with state authorities. The Centre, on the other hand, is opposed to the demand as it wants single registration mechanism for ease to service taxpayers. Instead of horizontally splitting the taxpayers – tax payers with Rs 1.5 crore revenue with states and those above with Centre – it has proposed to divide entire taxpayer base vertically, wherein taxpayers are divided between the Centre and states in a fixed proportion. 

As a compromise, it is willing to give states administrative power over two-thirds of the taxpayer base, with service tax continuing to be administered by Centre. An official said the informal meeting was held sans civil servants to arrive at a political solution.