THE NEW NORMAL

On March 4, the GST council provisionally approved two of four pieces of legislation to enable the new tax regime—the central and integrated aspects of the GST (CGST and IGST). The remaining two (SGST and UTGST) will be cleared at the next council meeting on March 16, clearing the decks for the tabling of the bill in the budget session. “Subject to Parliament approving the bills,” said finance minister and GST council head Arun Jaitley, “July 1, 2017 optimistically looks like the possible date for GST implementation.” That optimism was not universal: J&K finance minister Haseeb Drabu, for instance, said that some “minor editorial changes” were still required in the CGST and IGST drafts, which, according to him, as quoted in some reports, might push the GST rollout to September 1.

The process of building a consensus with the states has come at the cost of simplicity, which was to be the defining feature of GST. For one, the process has weakened a central principle: that the GST be a simplified tax administration that does away with the cascading effect of indirect taxes. At the same meeting, West Bengal finance minister Amit Mitra said as many as 26 changes sought by the states had been included into the two draft laws, but sought to put a positive spin on it by describing it as “showing the federalist character of India”. Satya Poddar, Tax Partner at EY India, took the view that a conciliatory approach also meant that GST, in its present shape, has not managed to limit the cascading effect enough. To make it worse, nearly half of all consumer goods will remain outside the purview of GST, while the other half will be assessed in a multiple-tier rate structure. Rates for taxes on services are in multiple slabs as well. The next meeting will decide which commodities/ services fall into which tier.