The Centre may be forced to keep its options open for the roll-out date for the goods and services tax (GST), with a number of companies as well as a few State governments raising concerns over the short time for the implementation of the indirect levy.
“We are confident of meeting the April 1, 2017 deadline for the roll out of GST and our strategies are also focussed in that direction. But if the need be, we can look at extending its roll-out by a few months,” said a senior government official.
After the Constitution Amendment Bill for GST was passed by the RajyaSabha in the Monsoon Session of Parliament earlier this month, Finance Minister ArunJaitley had said the government would target the next fiscal for its roll-out.
However, concerns have emerged from a few States as well as a number of companies over the preparedness for the implementation of the country’s largest indirect tax reform.
“All States support GST and want it to be implemented at the earliest. But, it is better to have a sound design of the tax system than have a hurried approach. If required, there has to be a leeway of a few months, and alternate deadlines of say June 1, 2017 or September 1, 2017 should be considered,” said a State Finance Minister, who did not wish to be named.
Sources also indicated that the issue is likely to be raised when the Empowered Committee of State Finance Ministers meet on August 30.
The Centre and the States still have to reach a consensus on a number of crucial issues before GST can be introduced, including the rates of tax, list of exemptions, control over small businesses and also finalise and pass the subsequent GST laws.
Meanwhile, similar concerns were also raised by a number of companies last week at a series of meetings that the Finance Ministry held with trade and industry over GST.
Companies are understood to have pointed out that they would require some time for preparing the IT infrastructure and pricing policies after the GST rate and GST Network are announced.
“Just as it is challenge for the government, GST implementation would also be a big task for the industry and trade in terms aligning their systems with the new taxation rules, combining different rules into a single paradigm,” industry chamber Assocham had noted in an earlier release on August 8.
Reserve Bank of India Governor RaghuramRajan had also noted that the implementation of GST from April next year would be “challenging”.
However, the Finance Ministry is going ahead in full swing with preparations for the new tax regime, which is being reviewed frequently by the Finance Minister. Revenue Secretary HasmukhAdhia is also holding weekly meetings to monitor the progress for its implementation.
Meeting the deadline of April would indicate the Centre’s appetite and commitment to reforms to foreign investors and rating agencies as GST has been long delayed.