The much awaited progress on GST, post indication of 1 April 2016 as the deadline for implementation by the Finance Minister, has gained momentum. The GST Bill was approved by the Lok Sabha on 6 May 2015.
The government in the session has committed to compensate states for any revenue loss and has specified that the new uniform indirect tax rate will be much less than 27 per cent as recommended by an expert panel.
GST is expected to be a single wide-ranging tax levied on goods and services consumed. Implementation of GST by the union Cabinet will be the second major tax reform in India in the area of Indirect Taxes, the other being introduction of the Value Added Tax in various States of the country in 2005.
However, if implementation of GST has to see the light of the day, the government has to ensure that several activities that are prerequisite for its implementation will have to move at a quick pace.
The government will have to progress promptly on approval of the bill by the Rajya Sabha, ratification by more than 50 per cent of the states, etc.
Further, the government will also have to work towards setting up of IT infrastructure, discussions on threshold/ rates, introduction of the draft law, etc.
While it appears that the government has a mammoth task before it to meet the deadline of 1 April 2016, the various businesses/industries also have a humungous job ahead of them so that they are ready to meet the GST law requirements when it is introduced.
GST may not only have an impact on the tax aspect of the business, but also other functions such as marketing, supply chain, HR, IT, etc. Hence, the various businesses as well as industries have a time frame of only 11 months available with them from today to revamp their various business functions.
It is high time that various businesses/industries of the country initiate discussions on the various aspects including changes in the IT set up, need of the depots/warehouses/stock points under the supply chain, pricing strategy, compliance requirements, etc. It seems important that on the basis of such discussions, companies identify the various pain points or advocacy points that may require a representation before the government so that enough clarity is provided on such matters in the law for when the bill is introduced.
Thus, it is imperative that the management of every company/business house makes an effort that various divisions of the business join hands to work towards being completely ready when GST goes live, and it should be business as usual for them on the first day of the next financial year when the new law is expected to be implemented.
The author is Partner-Indirect Tax, KPMG in India. Views are personal