The Empowered Committee of State Finance Ministers has decided on no index of declared goods including cloth, sugar, foodgrain and pulses. The Finance Ministers have met in Mussoorie for two days.
Earlier, the State got a percentage of additional excise duty on cloth and sugar, but now the Union Government has abolished additional excise duty. Although the Centre has compensated itself by raising tax slabs, the empowered committee formed a sub-committee to study its impact on States.
The panel has also refused to include mobile phones and Tablets, which were suggested by IT Minister Kapil Sibal, on the declared goods list. The issue of tax evasion through Railways was also raised and the committee will meet the Finance Minister to resolve it.
The Empowered Committee decided on a company, which will create IT and infrastructure to implement the GST network. They will develop a central portal to see to modalities of common registration, payment and return filing system.
The State and Centre would hold a 24.5 per cent share each, while the remaining 51 per cent share would be the private company’s, who will develop the system. However, States have agreed that under the VAT regime, their collection was better than earlier. To discuss GST and VAT for special category States, there will be a separate meeting in Shillong, in June.
“Overall, we have moved positively,” Sushil Kumar Modi, chairman of the committee of Finance Ministers and Bihar Deputy Chief Minister, told mediapersons after end of the two-day meet on Saturday.
On the first day of the meeting, the Centre and States agreed on a common exempted list for at least 96 goods under the proposed Goods & Services Tax (GST) regime.
They discussed the final report of the sub-committee on the exemption list, as well as the threshold limit for GST registration by traders. The sub committee recommended a common list of exempted goods for both Central Goods and Services Tax and State Goods & Services Tax.
At present, 96 items are in the exempted category of goods for value added tax (VAT), while the Centre has exempted 243 items from Central excise. Now, the Union will bring down the list of exempted items from 243 to 96. This will be done in phases, so that we can have a common list of exempted goods for GST. Since service tax is imposed by the Centre, there is nothing called a common list, Modi added.
There is also an agreement over the limit of Rs 1 crore and 0.5 per cent floor rate for the compounding scheme. Compounding allows a trader to pay minimum tax, but not get tax credit. At present, various States have a limit ranging between Rs 40- Rs 50 lakh, with rates of tax of 0.25 to 0.5 per cent.
The sub-committee suggested a limit of Rs 60 lakh, but the Madhya Pradesh government had suggested that since the limit under Income-Tax Act in Rs 1 crore, it should be same for the composite scheme. It was also agreed to have no threshold for inter-State trade.