After months of tough bargaining, the Centre and states finally managed to break the deadlock on two crucial issues concerning the goods and services tax (GST) but ended up pushing the rollout date from April to July.
Both sides agreed to cede some space to arrive at a consensus that eluded the GST Council during the last six meetings.
On the issue of dual control where states wanted exclusive control over small units, with annual turnover under Rs 1.5 crore, the council agreed on a formula which will see states administer and control 90% of the smaller entities, with the remaining coming under the Centre’s purview.
On the second contentious issue of levying tax on the high seas – or within 12 nautical miles of the coast – the GST Council decided to go along with the states, which wanted to retain the power to tax economic activity although it maintained that constitutionally, the Centre had jurisdiction over territorial waters.
For entities with annual turnover above the Rs 1.5 crore threshold, the Centre and states will share control equally but finance minister Arun Jaitley said each taxpayer would have to deal with only one agency and be assessed once.