GST rollout: Central officials prepare for delay

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With the rollout of national goods and services tax (GST) set to miss the April 1, 2016, deadline, the government is readying for a later date.

Parliamentary Affairs Minister Venkaiah Naidu had on Saturday spoke of advancing the winter session of Parliament if the Congress party was amenable. However, senior officials say although the revenue department of the finance ministry is administratively prepared for GST, it will take at least two Parliament sessions, even after passage of the pending Constitutional amendment to enable it, before the uniform indirect tax regime can be set in motion.

Once Parliament does approve the amendments to the Constitution, at least half the state legislatures have to ratify these amendments. Then, the Lok Sabha and Rajya Sabha have to each pass the actual GST Bill, after which state has to pass its own Bill in this regard, on the same principles.

The empowered committee of state finance ministers is set to meet here on Tuesday to discuss these legislations – the central GST, states’ GST and integrated GST. The drafts of all three are said to be complete.

Officials say mid-year implementation of the globally tracked reform will not be a hurdle, administratively. For, there are other indirect tax measures, including changes in excise duty, service tax and customs duty, that are made mid-year. In fact, the value-added tax regime was implemented in phases across the country, with some states coming on board later.

“There will simply be no hurdles related to accounting as far as mid-year implementation of GST is concerned. However, with passage of the Constitution amendment Bill for GST in Rajya Sabha delayed further, rollout by April 1 does not look likely at all, for now,” said an official, adding, “There is also a provision for partial rollout from April 1 but it does not look feasible, given the complexity of GST.”

There is also a belief that as GST is one of the biggest tax reforms ever attempted; it could also be feasible to delay the rollout date by an entire year. There is a view among policymakers that it would be convenient for the Centre, states and businesses if it is rolled out from the beginning of a financial year.

“If not April 2016, then April 2017 should be seen as a more feasible time. It might be difficult for the government and businesses to come into a new tax regime in the middle of a financial year,” said another official. Last week, NITI Aayog Vice-Chairman Arvind Panagariya had said he was hopeful that the legislation could come into force by October 1, 2016, if not the proposed deadline of April 1. “If there is consensus, the government is willing to advance the winter session of Parliament for passage of the GST Bill,” Naidu said, on the sidelines of an event on Saturday. One of the issues still to be sorted, apart from passage of Bills, is of a revenue-neutral rate. All sorts of rates have been discussed, from 18-27 per cent, even as a panel has been formed under Chief Economic Advisor Arvind Subramanian to look into it.

Source : Business Standard

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