Govt. stands by GST rollout date 1st April, but experts say a delay looks imminent!

IOS recently informed you that the government’s plans to relax GST rules regarding registration for online retail companies. The Centere and states came together on Sunday to approve the bill, but this did not occur. It has been decided that on 22nd and 23rd December, the states and Central governments will meet up again to reach a consensus. However, this could make it tough to meet the 1st April rollout date for the goods and services tax throughout the country.

After the meeting the Finance Minister, Arun Jaitley announced, “Today we had discussed which was exclusively on the legislative drafting. So bulk of the critical provision we have approved today. There is one section which needs to be redrafted… one cross empowerment issue which we are leaving aside and therefore the discussion on the legislation and its approval each section is moving satisfactorily. And hopefully in the next meeting we would be able to clear it.”

What’s causing the slowdown?

The states and Centre seem to be stuck on issue of administrative control post-implementation of GST. States like West Bengal have argued that demonetisation will impact GST revenues. Tamil Nadu, Bihar and Kerala are looking for administrative control over goods and services below Rs.1.5 crore.

When asked if dual control and the issues it imposes were discussed, Jaitley said, “Well, that issue did not come up for discussion today because today’s agenda was taken up exclusively by the legislation and that’s an issue which is still flagged and still pending. I have various options ready for discussion and as and when it is discussed we will place those options before the council.”

Can we expect a delay in implementation?

The Financial Minister mentioned that the government is sticking to 1st April as the rollout date. GST rollout has been identified as a chief reform priority.

He further stated, “I told you after the last meeting also our target is the 1st of April. The luxury of time is not available to us for the simple reason that if 1st April is the first possible day it can be implemented, then the last date also is constitutionally defined as 16th of September 2017.”

“So the discretion as to when to implement is only five months and 16 days and that’s why we don’t have the luxury of time because after five months the curtains will be down on the old taxation powers,” the minister pointed out.

Tax experts say, there will be a delay!

Tax experts suspect that the 1st April target will be missed.

Pratik Jain a partner and leader at indirect tax, at the consultancy firm PwC said, “It’s unfortunate that there was not much headway in the GST Council meeting. The only silver lining was that substantial progress seems to have been made on discussions with respect to laws and broad consensus was reached for provisions up to Chapter 20 (out of total 27 chapters).”

“Having missed the winter session, one would hope that Centre and states would be able to work together to make it happen in the budget session. April 1, 2017 seems a stretched target now and a minimum of 3 months delay looks quite imminent.”

However, the government is very keen on introducing the GST bill in the winter session of Parliament but now it looks like it may be put in the budget session in January.

When asked about this, Financial Minister said, “As and when we finalise the issues before the Council and there is a consensus before the Council, we will answer the question at that stage.”