Consensus on, stage set for GST rollout from July
Centre, states break impasse over issue of control of taxpayers
The goods and services tax (GST) is set to be rolled out from July 1, after the Centre and the states struck a consensus on the contentious issue of sharing of administrative powers.
The way is now clear for the Union government to table the associated bills in the second half of the upcoming budget session of Parliament commencing from January 31. To be sure, there are other issues that need to be addressed; for instance, the GST Council will also have to resolve issues regarding the tax slabs.
At the end of the ninth meeting of the GST Council on Monday, both sides agreed to work towards meeting the new deadline and sharing administrative control over small and big tax payers in a fixed ratio.
Both, but especially the Centre, conceded some ground to generate a consensus on the issue, which was threatening to derail the implementation of the singular piece of tax reform that will, for the first time, economically unify the country.
The Centre had earlier targetted an April 1 rollout.
“There was a significant headway in today’s meeting,” finance minister Arun Jaitley said. “Industry also needs time to prepare for GST rollout. So GST Council is of the view that July 1 may be a more realistic target.”
There will be an estimated 8 million taxpayers under GST.
According to the agreement between the Centre and the states, small taxpayers with an annual revenue of less than ₹1.5 crore under GST will be divided between the states and the Centre in the proportion of 90:10 for the purpose of scrutiny and audit. This will be done randomly.
All taxpayers above this threshold will be equally shared (again randomly) between the Centre and the states. The divisions will not make a distinction between goods and services.
Further, through a special provision of the law, states will also be empowered under integrated GST (IGST) law to administer taxpayers in the ratio mentioned above. At present, the power to levy and collect IGST is with the central government.
The Centre also yielded to the states’ demands for taxation powers in territorial waters up to 12 nautical miles in the IGST law.
All states except West Bengal agreed to the new formula, said Jaitley.
In the next meeting of the GST council on February 18, the council will finalise the draft laws — the central GST law, the state GST law and the IGST law— after incorporating the changes that have been agreed upon. Thereafter, the task of assigning items to different tax slabs will begin.
Finalising the rollout date helps the government to incorporate GST revenues in its budget calculations.