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).
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.
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.
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.