Finance ministry confident of rolling out GST by April 1 next year

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No Plan B to defer its introduction yet

The finance ministry still hopes to implement goods and services tax (GST) from April 1, 2016 even if the constitution amendment Bill is not passed by the Rajya Sabha in the monsoon session, which is slated to end on Thursday. However, independent experts are not as sure.

Sources in the finance ministry said there would be tremendous pressure on the ministry if the Bill is not cleared by the Rajya Sabha in the ongoing session, but it is not impossible to meet the deadline of introducing GST.

“A window to pass the constitution amendment and GST Bills between December and March would be narrower. It would be difficult, but it is not impossible to clear them,” a key official said.

Meanwhile, Empowered committee of state finance ministers Chairman K M Mani said implementation of GST from April 1, 2016 would be very difficult if the Bill is not cleared by Parliament in the current session, but all those concerned will try to overcome them and introduce the new indirect tax system from the targeted date. Mani met Finance Minister Arun Jaitley earlier in the day.

After the constitution Bill is cleared by Parliament, it has to be ratified by at least half the states – 15 out of the 29. After this, a GST council has to be set up which would approve GST Bills, to be passed by Parliament and each state legislature later.

Sources said 80 per cent work on GST laws has been complete. “We hope to finish that by this month-end. So, the draft Bill will be ready by the month-end,” they said. Model GST laws will relate to central GST, state GST and integrated GST, which will be imposed on the interstate movement of goods.

After the Empowered Committee of State Finance Ministers approve the GST Bills, part of it comprising business processes relating to requisitions, return, payments would be put up for comments on the public domain. However, the ultimate Bills have to be okayed by the proposed GST council. The ministry has not prepared any plan to defer the rollout of GST beyond April 1, 2016.

But, if the constitution amendment Bill does not get cleared even in the winter session and is delayed further, there could be a problem as far as the deadline of April 1, 2016, is concerned, sources conceded.

Then, the ministry in consultation with the Empowered Committee would decide on the next timeline. It could be April 2017 or mid 2016-17.

The mid-year could be a possibility then, but the accounting procedures will be required to be changed accordingly, sources said, adding it will again not be a problem. “However, we are not looking at that situation, as of now,” an official clarified.

The Bill, as passed by the Lok Sabha, clearly states that the GST council has to be constituted by the President within two months of enacting the constitution amendment Bill. The council will be a body comprising Union finance minister, state finance ministers and would be empowered to take key decisions relating to GST.

If the constitution Bill, in fact, gets cleared in the winter session, the government will have to persuade half of the states to ratify it, constitute the council, put up GST Bills there, and get them passed by Parliament and each of the state legislatures within December-March.

Sources in the finance ministry said most of the state assemblies are also meeting at in December-January for the winter session and others may call a special session of their assemblies to ratify the constitution amendment Bill. However, experts have their own doubts.

For instance, Amit Kumar Sarkar, partner, Grant Thornton India LLP said, “In the event the constitution amendment Bill is not passed in the Rajya Sabha in this present session, it is extremely difficult for the government to introduce GST in India effective from April 1, 2016.”

He said April 1, 2016 is a very ambitious target to introduce the GST. “Realistically, the government should be looking at April 1, 2017 or maybe July 1, 2017 as the effective date for introducing GST in India, in case the Bill is not passed in this session.” The winter session of Parliament is slated to come to close on Thursday.

Source: http://www.business-standard.com/article/economy-policy/finance-ministry-confident-of-rolling-out-gst-by-april-1-next-year-115081200041_1.html

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