GST, the things to be decided include the threshold (in terms of turnover of businesses) where the tax would kick in, central and state GST rates, a common list of exemptions with a small window for state-specific alterations etc.
At the scheduled January 6 meeting, officials of the Union government and state ministers are expected to give final shape to a consensus on GST’s structure and compensation to states for their reduced revenue collection from central sales tax (CST) on goods.
CST, which is levied on the movement of goods from state to state, was lowered from 4% to 3% in 2007-08, and further to 2% in 2008-09 after the introduction of Value Added Tax (VAT). States were given a compensation of Rs 6,393 crore for 2010-11 but they insist on getting Rs 12,666 crore more for the period. The finance ministry lowered compensation to states that raised their VAT from 4% to 5%, taking into account the revenue thus raised.