Punjab for fewer GST exclusions, higher exemption threshold

New Delhi: Punjab has sought a comprehensive review of all exemptions under the goods and services tax (GST) while revising the threshold for such exclusions, signalling a possible shift in the political dynamics within the GST Council ahead of next year's general elections.

In a letter to Union finance minister Arun Jaitley, Punjab finance minister Manpreet Badal also sought the inclusion of electricity, real estate and petroleum products under GST. "We may also have a look at the entire gamut of tax rates and exemptions so that a long-term blueprint is available for our forward path," he said.

Originally, only essential items such as wheat, rice and food grains were included in the exempted category, but the list expanded after many states sought inclusion of mass-consumption items in their states.

Making a strong pitch for a comprehensive review of all exemptions while revising the threshold, Badal said, "Most progressive regimes globally promote high thresholds for exemption but with few exemptions. Somehow we have started with low thresholds and subsequently have given a very large number of exemptions."

In his letter to Jaitley, the Punjab finance minister also said there should be a common composition limit for goods and services.

These demands assume significance in the backdrop of the upcoming general elections and could be a sign of the opposition Congress getting more assertive with increased representation in the council following its victory in three recent state polls, defeating the Bharatiya Janata Party.

The meeting of the GST Council held on December 22, following the poll results, was a politically charged affair with some Congress state ministers opposing cuts in tax rates of some products to 18% from 28%.

Representatives of BJP-ruled states demanded that this opposition be recorded in the minutes of the council, citing a contradiction with the Congress party's public demand that all goods be taxed at 18%.

Congress state government representatives, on the other hand, objected to Prime Minister Narendra Modi making an announcement with respect to reducing the number of items in the 28% slab ahead of the meeting of the council, the apex decision-making body for GST.

The council had thus far managed to keep politics out of its deliberations, with most issues getting decided by consensus.

Punjab also sought reconstitution of the law review committee, in view of the upcoming general election, to look at the entire law holistically. "We should avoid the temptation of another knee-jerk reaction and work towards making our GST truly world-class," said Badal.