India is bracing with tense anticipation for the inauguration of the goods and services tax (GST), which is expected to rewrite the rules of business, while reducing the burden on the common man.
GST is billed to integrate India into a common market, bigger than the European Union. Proponents say that by doing away with the plethora of taxes and barriers on state borders, GST will accelerate economic growth.
But while the promise is enticing, apprehension of disruption has been straining the nerves of policymakers, and businessmen, both large and small.
The Centre has ignored calls to postpone the launch by at least a few months and chosen to press ahead with it. The high-profile midnight launch in the Central Hall of Parliament has certainly raised the stakes for the government.
However, the government is seeking to buffer the initial bumps, which, it concedes, can’t be avoided because of the scale of the task and the size of the country.
With rule-making on GST going on till the last minute, the government has already eased rules – from introduction of an electronic way bill or a border pass, to filing requirements and the need to deduct tax paid to vendors by government departments and e-commerce companies.
The spreadsheet that will enable companies and firms to maintain electronic accounts, along with invoices, is yet to be released by GST Network, the not-for-profit company providing the technology platform. It will only be released on Friday.
With negotiations to finalise the structure going on till a fortnight ago (in fact, some rules will be cleared only on Friday, hours before the launch), even the requirement for businesses to register before the new regime kicks in has been relaxed. Now, suppliers can register till July-end. But the government reckons that most businesses are already registered as over 66 lakh of the 80 lakh traders, firms and companies have now registered on the portal operated by GSTN.
Businesses, however, complain of several glitches and confusion. Several large companies have virtually shut down operations as they transition to a new regime and update their software and invoicing systems.