Ready for migration
While Gujarat is best prepared to implement GST, others will shift within a month
The long journey to rolling out India’s biggest tax reform, the goods and services tax (GST), is seemingly nearing an end, with the official deadline still July 1. The states had been anticipating that the scope for manoeuvre could at best be three months, and were gearing up for implementation. Whether a producing state or a consuming state, a BJP state, or a non-BJP state, the only difference that is material right now is the degree of preparedness.
It is, of course, no surprise that Gujarat is best-prepared to implement GST with 87 per cent manufacturers, dealers and traders on the existing tax platform having migrated to the GST network. The rest are likely to migrate within a month. But other states have not fared badly, either.
If Odisha government officials are to be believed, the only work left to be done is the translation of GST Bill into Odia. Tamil Nadu is ready to roll-out the GST on July 1, and despite the Modi-Mamata politicking, preparations for rolling out GST started in the commercial tax department of West Bengal almost a year ago.
We consider the producing states of Gujarat and Tamil Nadu and consuming states of Odisha and West Bengal and check how prepared they are to roll out the GST.
GUJARAT
Around 87 per cent, or 435,000 of the registered 498,000 manufacturers, dealers and traders on the existing tax platform have migrated to the GST network. The balance will follow suit in a month.
Training across various tax departments for 3,000 people has started, apart from rolling out the latest hardware and software. Come April, 42 Master GST Trainers will train all state government officials. Pankaj Patel, chairman of the Zydus group and president of the Federation of Indian Chambers of Commerce and Industry (FICCI), said most companies had been working on their GST preparedness for long because it was known beforehand.
As for the Zydus group, Patel added it had started preparing for the GST switch since the beginning of this year. It had formed internal committees, upgraded software and automation techniques, and had appointed tax consultants for implementation support. Cadila Healthcare, the pharmaceutical major, and Zydus Wellness, the group’s personal care arm, are working with their vendors to educate them about the new system.
TAMIL NADU
Tamil Nadu has so far brought 86 per cent of the dealers under the new tax regime. The state, which initially had issues with GST, has said it is fully committed to its GST roll-out and its successful implementation.
“As soon as GST and compensation laws are passed by Parliament, we will be in a position to place the state GST Bill before the Assembly,” said Tamil Nadu Finance Minister D Jayakumar.
Jayakumar said concerns raised by the state had been accommodated and this augured well for the development of a healthy federal system.
ODISHA
To complete the roll-out of the GST, a special session of the Assembly is likely to be convened in May for passing the state (Odisha) GST Bill.
“We are fully prepared to implement the GST. The only work left to be done is the translation of the state GST Bill into the Odia language and that will take about 10-15 days. There is a ruling that all Bills to be tabled in the Assembly have to be presented in both Odia and English,” said an official associated with the implementation of the new tax law.
Ahead of the implementation of GST, the state government has decided to abolish all interstate border check gates from April 1, 2017. The state had established 22 check gates under the Odisha Sales Tax Act, 1947. This apart, the check gates were functioning under the Odisha Value Added Tax Act, 2004, with a view to preventing or checking the avoidance or evasion of tax.
The state government has a robust infrastructure for implementing the unified tax as it has been administering taxes online on the VATIS platform.“Odisha is among the 25 states that use both the front end and back end models of the GSTN (Goods and Services Tax Network). We are in readiness with the infrastructure and there is only need for connection,” an official added.
As a part of capacity building to move to the unified tax regime, the state government has trained 600 commercial tax officers. In the next phase, the office of the commissioner of commercial taxes has drawn up a training schedule for tax officials and stakeholders like advocates, service providers and dealers over the next three months.
WEST BENGAL
The commercial tax department of the West Bengal government has been gearing up for the GST roll-out over the past year. Training sessions in the department are being held regularly.
A GST Migration Seva Kendra has been set up in the office of the Commissioner of Central Excise, Kolkata, for addressing queries pertaining to registration on the GSTN in particular and anything related to the GST in general.
Migration of VAT dealers to the GST is also in progress.
With a majority of assessees in West Bengal having an annual turnover of less than ~1.5 crore, the state is expected to be significantly burdened under the GST regime. The state will end up administering and controlling 90 per cent of the assesses below ~1.5 crore annual turnover.
Even though there is some level of preparedness for GST at the government level, industries are still awaiting final laws pertaining to the tax.
“Forget big industries, even small industries are not prepared for GST. There is no clarity on the GST state laws. Also, there is a need for training of assessees. In this situation, if GST is implemented by July 1, there might be a lot of confusion,” said Timir Baran Chatterjee, chairperson, indirect taxes committee, Bengal Chamber of Commerce and Industry, and mentor, Tax Connect Advisory Services LLP.
Naresh Bhansali, CEO of finance strategy and business development as well as chief financial officer at Emami, however, said Emami was adequately prepared for the switchover.
Emami as well as Eveready Industries had been training people and putting in place the required technology to handle the new tax policy.
“We have been studying the impact of GST on our procurement and distribution processes and handholding our partners,” Bhansali said.
Eveready, too, has been seeking advice from tax consultants and aligning its IT processes.
However, both expect initial friction from the unorganised and the wholesale segment when GST is rolled out.
But CII Eastern Region Chairman Umesh Chowdhary is of the view manufacturing companies in categories such as consumer goods, automobiles, auto ancillaries and others had begun their groundwork in time. But, services segments such as banking, insurance, media and entertainment have been laggards and are catching up only now.