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Data caFe: The GST’s exemption complications

As the empowered committee (EC) on goods and service tax (GST) gets down to handling the specific issues, difference in the composition and handling of exemptions at the State and the Central level has thrown up a major challenge requiring deft handling.

As the empowered committee (EC) on goods and service tax (GST) gets down to handling the specific issues, difference in the composition and handling of exemptions at the State and the Central level has thrown up a major challenge requiring deft handling. While there are only 96 items exempted under VAT, handled by the States, more than 300 items are in the exempted category under CENVAT, which comes under Centre’s purview. This means that if the exempted list of items under VAT is adopted in GST, then more than 200 items, which are not subject to CENVAT currently, will be subjected to Central GST in addition to the State GST in the new tax regime. This would lead to increase in prices of these commodities, which also include foodgrains. The EC committee on dual control threshold and exemptions in the GST regime, has suggested a common list of exempted goods, both for SGST and CGST.

The panel has favoured VAT exempted list to be taken as base for both SGST and CGST and then removal of exemptions in case of the other items exempt under CENVAT in phases. In case of services also, the committee has recommended common exempted list for SGST and CGST.

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First published on: 11-06-2013 at 00:56 IST
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