India government ‘ignored warnings’ over GST roll out

mumbai — The Indian government ignored several warnings from private companies that the complex technology required for a nationwide goods and services tax (GST) to work smoothly was not ready for launch, several people who worked on the project said.

Weeks before the July 1 start of India’s biggest tax overhaul in decades, the government declared itself ready and chided industry experts who said more time was needed to prepare for the changes.

“It’s not a complicated process,” Finance Minister Arun Jaitley said on June 20.

However, more than 10 tax and IT consultants who worked on the project said that behind the scenes the government was ignoring warnings for more testing of the complex system even as it was pushing through late changes.

While the sources said Infosys, which built the GST technological network, made “basic errors”, they said government officials have not accepted any responsibility for the glitches in the GST roll out.

The GST law was debated for decades, industry had enough time to prepare, and glitches are being fixed Finance ministry spokesman

The government is still making changes to tax rates, filing deadlines, and other features, making it difficult to stabilise the system, they said, declining to be identified for fear of losing future government contracts.

“At that time, the powers in New Delhi were mocking industry, saying ‘the government’s ready, but industry’s not’,” said the director of a financial planning firm involved in developing the GST network. “Now people are laughingly asking, ‘so who was really not ready?’,” he said.

The finance ministry and GSTN, the government authority managing the GST network, declined to comment on specific problems about the GST rollout or specific warnings by industry that more time was needed for testing.

The GST law was debated for decades, industry had enough time to prepare, and glitches are being fixed, a finance ministry spokesman said. Infosys said in a statement that “several stakeholder concerns” had been raised about the GST system and some of its best engineers were working to resolve all issues.

The GST system was designed to replace a slew of federal and state levies, and Moody’s Investors Service has said the tax would boost the economy by removing trade barriers between the country’s 29 states.

However, since launch, the system has been beset by problems from a confusing tax structure with four main rates to technical glitches that make it unstable. — Reuters