Govt frames parameters for division of taxpayers under GST

The Centre and states will divide the taxpayer base under GST through computer-based random sampling taking into account geographical location and type of the taxpayer, the government said on Thursday.

In a circular to all chief secretaries of states and principal commissioners of Central Tax, the GST Council secretariat laid down guidelines for division of taxpayers on the basis of their turnover to ensure single interface under the new indirect tax regime which was rolled out on 1 July.

Accordingly, states will administer and control 90% of the assessees below Rs1.5 crore annual turnover, and the remaining 10% coming under the Centre. The Centre and states will share control of those assessees with annual turnover of over Rs1.5 crore in 50:50 ratio.

“The division of taxpayers in each state shall be done by computer at the state level based on stratified random sampling and could also take into account the geographical location and type of the taxpayers, as may be mutually agreed,” the circular said.

Based on this division it would be decided whether a taxpayer would be assessed by Centre or by state. Besides, various methods are to be followed by tax officer for computation of turnover of businesses who were registered in the erstwhile excise, service tax or VAT regime.

Chartered Accountancy firm AMRG & Associates Partner Rajat Mohan said this mode of division of taxpayer base may further open new channels of litigation. “It is impossible to ascertain whether this will push more tax payers in the kitty of state governments or central governments,” he said.

The GST Council secretariat said in the circular that state level committee comprising chief commissioner or commissioner of respective states and jurisdictional central tax commissioners are already in place for effective coordination between the Centre and states.

“The Committee may now take necessary steps for division of taxpayers in each state,” it added. There are over 86 lakh businesses registered on the GST Network portal.