A decision on contentious issues like exemption and threshold taken with consensus without voting in the first meeting of GST Council signals that the April 2017 rollout deadline is achievable, experts said.
They also hailed the decision to enhance the annual turnover for exemption to Rs 20 lakh, saying it would be administratively easier for the government and several small businesses.
“Overall, a good day in office for the GST council, particularly because all decisions were taken with consensus, without the need for voting,” PwC India Leader Indirect Tax Pratik P Jain said.
The GST Council, chaired by Union finance minister, which met for the first time, decided on keeping traders with an annual revenue of Rs 20 lakh out of the new national sales tax regime that will subsume all cesses.
Resolving issues over dual control over small traders, it decided that states will have exclusive control over all dealers up to a revenue threshold of Rs 1.5 crore in a year.
A mechanism will be worked out for traders above Rs 1.5 crore to ensure a dealer is regulated either by the central government or the state and not both.
Deloitte Haskins & Sells LLP Senior Director M S Mani said inclusion of cesses in GST will significantly benefit all businesses and increase the available pool of credits which can be used to offset the GST liability.
“The consensus on the GST threshold achieved today indicates that the date of April 2017 is very likely to be the Go Live date for GST in India,” Mani said.
Experts said the decision that all cesses will also be subsumed in GST provides the much-needed clarity to the industry and will allow better uniformity of taxes to businesses.
BMR & Associates LLP Leader Indirect Tax Rajeev Dimri said retention of administrative control over existing service tax assessees by central authorities highlights an open mindset to facilitate smooth transition to GST.
On service tax, the Council decided that in absence of expertise with states, the Centre will continue to exercise control over all the 11 lakh service tax registered dealers irrespective of their revenue levels.
“This will allow some time to the state authorities to gear up administratively for taxation of services, given a short time for internal trainings and with so much else to do. The current announcement, however, only addresses part of the dual control issue,” Dimri said.
He, however, added that clarity is still awaited in respect of clients with mixed profile of businesses.
EY India Indirect Tax National Leader Harishanker Subramaniam said the interesting point is that for GST on services, the Centre will have administrative control irrespective of threshold at least in the initial years till states are trained to handle services.
“This may be a good news for the industry as many were worried as to how states will handle complexity of services. However, in my understanding, this may mean dual control for companies which have both services and goods supplies,” he said.