GST deadline goes for a toss but FM still hopeful
States say roll-out can happen only in Sept; Council meet deferred to Dec 22-23
The proposed Bills to enact a national goods and services tax (GST) are set to miss the entire winter session of Parliament, due to conclude on Friday.
The Centre and states are yet to finalise the legislation, rendering the April 1, 2017, rollout target seemingly impossible.
However, Union Finance Minister Arun Jaitley, who chaired the GST Council meeting on Sunday, did not rule out introducing the new indirect tax system from the targeted date. Not possible now, say the finance ministers of Kerala and Tamil Nadu.
The Council deferred its scheduled meeting on Monday due to the Eid holiday. It will now convene on December 22 and 23, when it is to again take up the prickly issue of administrative turf over assessees.
The shadow of demonetisation also cast its shadow on Sunday’s meet, with Kerala Finance Minister Thomas Isaac saying the Centre’s sudden announcement on withdrawal of high-value currency notes had eroded the trust of states. Jaitley evaded a direct reply to a query on this issue, saying it was not an issue for the meeting.
“Our target is April 1 and we stand by it. We do not have the luxury of time, as April 1 is the first possible day when GST can be implemented and the last possible day is September 16, 2017. So, the discretion for the rollout is only five months and 16 days,” Jaitley told a press conference after the meeting.
If Sunday’s meeting had approved the GST legislation, this would have provided an opportunity to get these Bills passed during the ongoing session of Parliament, paving the way for an April 1 roll-out. The next window for the Centre to introduce the legislation will be available during the Budget session next month.
“The Budget session starts from around this time in January… it can be taken up then,” Jaitley added. That session is set to be advanced by around a month from the usual date of the third week of February. The Centre will have to pass Bills for a central GST (CGST), an integrated GST (IGST) and on revenue compensation for the roll-out. Each state is then required to pass its own GST, the IGST and the compensation Bill from their respective assemblies. Key aspects of the CGST and state GST were discussed on Sunday, with a few clauses required to be re-drafted.
WE DO NOT HAVE THE DISCRETION OF TIME. BY SEPTEMBER 16, 2017, THE CURTAINS WILL DRAW ON THE OLD TAXATION RULES ARUN JAITLEY Union finance minister
DEMONETISATION HAS ERODED STATES’ TRUST. APRIL 1 DEADLINE IS OUT OF THE PICTURE. GST CAN BE ROLLED OUT ONLY BY SEPTEMBER 2017 THOMAS ISAAC Kerala finance minister
WE WANT FAIR PLAY ON DUAL CONTROL V NARAYANASAMY Puducherry chief minister
“We discussed section by section and chapter by chapter. A few clauses require to be redrafted. They will be discussed and put up in front of the Council in the next meeting,” said Jaitley. The contentious issue of crossempowerment to resolve dual control was not discussed. “In the next meeting, we will further discuss the legislations and simultaneously discuss the issues of cross-empowerment,” the finance minister said. Jaitley added he had options in mind to resolve the dual control issue. While states are pitching for a horizontal division, seeking sole administrative control over all assessees under a ~1.5 crore annual turnover threshold, the Centre is pressing for a vertical division, with no threshold limit.
Puducherry Chief Minister V Narayanasamy said states were looking for fair play on key issues. Isaac said the April 1 deadline was not possible. “Demonetisation has eroded the trust between Centre and states. GST can be rolled out from September next year,” he said.
Pratik Jain, partner at consultancy PwC, said the only silver lining was that substantial progress seemed to have been made on the discussion with respect to laws and broad consensus was reached for provisions up to Chapter 20 (of 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 seems a stretched target now and a minimum of three months’ delay looks imminent,” Jain added.