03 Dec 2016 19:44 IST

GST Council meeting hits demonetisation roadblock

Next meeting to be held on December 11 and 12

Concerns over demonetisation and its economic impact loomed large over the meeting of the Goods and Services Tax Council on Saturday and the Centre and State could not reach an agreement on the issue of administrative control of small businesses, particularly services.

“States wanted to discuss the fiscal situation after demonetisation of high value currency,” said Finance Minister Arun Jaitley after the second day of the fifth meeting of the GST Council

However, Jaitley expressed confidence that GST would be rolled out from the targeted April 1, 2017.

“I have a gameplan in mind to pass GST. We would like all issues to be resolved before the passage of the GST legislations,” he told reporters.

Low tax collection

The Council will meet again on December 11 and 12 and the Finance Minister hoped that there would be more progress on the issues.

“Tax collection can be 50 per cent low this month as there is no business in Delhi markets. If so, it would be hard to pay salaries of government employees,” said Delhi, deputy Chief Minister Manish Sisodia, adding that Finance Ministers of other States also expressed similar concerns at the meeting.

Meanwhile, Kerala Finance Minister Thomas Isaac said the Centre must change its position on cross-empowerment and control under GST before the draft model bills can be approved by the Council.

Tricky issue

The Council was expected to approve the draft model legislations for Centre, State and integrated GST as well as compensation; and also the tricky issue of administrative control over businesses.

Sources said the Centre was keen to keep control over service tax payers while the States were pushing for dual control.

States Including Kerala, Uttar Pradesh, West Bengal and Tamil Nadu have called for horizontal division of assesses under GST, which would mean that they would have exclusive control over small businesses that have an annual turnover of less than ₹1.5 crore. There would be cross empowerment of officials of the Centre and States beyond this limit.

However, calling for easier registration and compliance procedures, a number of other States and also the Union Finance Ministry has argued for a vertical division of assesses under which both the Centre and State will get a fixed number of assessees.

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