The Centre and the States failed to reconcile their differences on the issue of the threshold for exemption of businesses under the Goods & Services Tax regime, at the first meeting of the GST Council on Thursday.

“We will continue discussions on Friday and try to reach a consensus on the threshold,” said Finance Minister Arun Jaitley, who is also the head of the Council. However, on three other aspects — the rules and timetable of GST Council meetings, and the compounding procedure — consensus was reached, he added.

The agenda for the meeting suggested that the threshold for exemption should be ₹25 lakh, but some States want a lower limit. “There is a division of opinion on the issue. In Delhi, we want the threshold to be ₹25 lakh as otherwise small businesses will get impacted,” said Delhi Deputy Chief Minister Manish Sisodia.

Andhra Pradesh Finance Minister Yanamala Ramakrishnudu made a case for the exemption threshold to be pegged at ₹10 lakh.

Kerala Finance Minister Thomas Isaac told BusinessLine that the GST Council should function democratically and respect the rights of States.

Jaitley expressed the hope that there would be a consensus on the issue on Friday. He further said the issue of cross-empowerment or control over small businesses and compensation to the States would also be discussed on Friday.

“We will then finalise the dates for the next round of meetings when other issues such as the GST rates will be discussed,” he said, adding that the Vice-Chairperson of the Council will also be selected later.

States such as Andhra Pradesh, Uttar Pradesh and Tamil Nadu are understood to have sought voting rights in the GST Council in proportion to States’ representation in Parliament, but this did not find wider acceptance. Other States, including Kerala, wondered whether the GST Council Vice- Chairperson should be selected by consensus or elected.

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