Introduction of a special composition rate of tax at 6 per cent for services has taken the total rates of tax under GST to NINE i.e. 0 per cent, 0.10 per cent, 0.25 per cent, 3 per cent, 5 per cent, 6 per cent, 12 per cent, 18 per cent, 28 per cent).
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After the 32nd meeting of the GST Council, the government will find itself in a uncomfortable position to defend the catch-line “One Nation, One Tax” for GST.
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By giving State governments an option to decide soon between ₹40 lakh ₹20 lakh as the threshold limit, the GST Council seems to be losing its stranglehold over decision making ever so slightly. This could also be due to a change in the Constitution of the GST Council after the results of the recent State elections.
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There would be two threshold limits for exemption from registration and payment of GST for the suppliers of Goods i.e. ₹40 lakh and ₹20 lakh. The threshold for registration for service providers would continue to be ₹20 lakh and in case of Special Category States at ₹10 lakh.
The decision to leave out service providers from the threshold exemption limit is bound to contested as negates one of the canons of taxation promulgated by Adam Smith — equity.
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