Political deadlock unresolved; Centre now looking at April 2017 rollout
The rollout of the country’s most significant indirect tax reform is almost certain to be further delayed, with the government easing up on the draft of the enabling model legislation to usher in a Goods and Services Tax.
While the Constitution Amendment Bill for the GST will be listed for consideration and passage by the Rajya Sabha in the Budget Session of Parliament, which starts on February 23, the groundwork for it is not fully in place.
A highly placed source said that “the model legislation that has to be passed by the Centre and the States has not been given full shape.” Discussions with the States on the modalities of the GST structure have not yet been held, the source added. The government was hoping to put out the drafts of the enabling legislation – Central GST, State GST, and Inter-State GST – for public discussion by the end of December, but that hasn’t come about.
The political deadlock over the GST bill too is far from resolved. Other highly placed sources said discussions are still going on with the Congress, which is unyielding on a review of certain provisions.
Another indication of the likely delay came at the pre-Budget consultations that Finance Minister Arun Jaitley had with State Finance Ministers on February 6. The rollout of the GST was not a ‘top priority’ at the meeting, sources said.
Jaitley’s deadline of April 1, 2016 for the GST bill’s passage will almost surely not be met, although he had recently expressed the hope that the Constitution Amendment Bill would be passed in the Budget Session. The government has been tentatively eyeing a mid-year rollout of the tax – either June 1 or October 1. But now the buzz is that the implementation of the GST may be pushed back by a year to April 2017.
“Even if the government manages to push through the Constitution Amendment Bill in the forthcoming session, it does not mean GST can be rolled out immediately. GST implementation also requires ratification by 50 per cent of the States,” a senior official told BusinessLine.
“Looking at the present scenario, it looks like the GST will not see light before April 1, 2017,” said Bimal Jain, Chairman, Indirect Tax Committee of the PHD Chamber of Commerce.
Besides, the Empowered Committee of State Finance Ministers last met in November 2015 and continues to be without a chairperson.
Also, the Centre is yet to formally provide the report on the possible GST rates drawn up by a panel headed by Chief Economic Adviser Arvind Subramanian. “Why should we put it out when there is no clarity on the political support,” a senior NDA Minister said.
A person familiar with the development said, “Discussions between the BJP and the Congress have been held at various levels, but a clear signal of intent is still awaited. It seems that the Congress has been shifting the goalposts.”