GST eyes July date as impasse ends

In a breakthrough in the implementation of  GST — India’s biggest tax reform —the Centre today agreed to allow states control over most of the small taxpayers, but the rollout date  of the new regime was pushed back by three months to July 1.

By Our Special Correspondent
  • Published 17.01.17
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New Delhi, Jan. 16: In a breakthrough in the implementation of  GST — India’s biggest tax reform —the Centre today agreed to allow states control over most of the small taxpayers, but the rollout date  of the new regime was pushed back by three months to July 1.

The meeting of the GST Council today decided to let the states have control of 90 per cent of the assessees with annual turnover below Rs 1.5 crore, with the remaining 10  per cent under central administration.

The Centre and states will share the control of assessees having an annual turnover of more than Rs 1.5 crore on a 50:50 basis even as finance minister Arun Jaitley insisted that each taxpayer will be assessed only once and by only one authority.

Besides ceding control, the Centre agreed to the demand of the coastal states to tax economic activity within 12 nautical miles of land, even though constitutionally the Centre has jurisdiction over territorial waters.

“This is a significant headway,” Jaitley said after the meeting.

“Decision arrived at on cross empowerment and dual control issue of GST (goods and service tax); entire taxation base to be shared between assessment machinery of Centre and states,” Jaitley told reporters after the GST Council meeting here. 

Jaitley said all state finance ministers were now on board over the issue of dual control except Bengal finance minister Amit Mitra.

Mitra said he dissented at the council meeting as his state wanted 100 per cent of the tax payers up to Rs 1.5 crore turnover to be with states. He termed 90 per cent of the assessees being with states “as a victory to protect small traders”.

“Administrative control with a single authority (either Centre or state) would ensure ease of compliances and assessment for the assessees,” Rajeev Dimri, leader, indirect tax, BMR & Associates LLP, said.

A bureaucrats’ panel is working on “classification”— a comprehensive, if not exhaustive, list specifying the tax rate that each good and service will attract. “The officials will start working out on the fitment of the rates on the various slabs,” Jaitley said. 

“This exercise will take us well into the month of March. The broad view was that July 1 appears to be more realistic (date for rolling out GST). Since it is a transactional tax, it can be introduced at any time of the year,” he said.

GST is expected to transform India into a single market, boost revenues through better compliance and a simpler procedure. 

The power to levy and collect Integrated-GST, a tax on inter-state movement of goods and services, will lie with the Centre but by special provisions in law, states will also be cross-empowered.

M.S. Mani, senior director — indirect tax, Deloitte Haskins & Sells LLP, said: “The announcement of July 1 as the rollout date is very welcome as it will enable businesses to get geared up well in advance.”

The council will meet on February 18 to approve the drafts of IGST law and other legislation.

“It appears that the government would be able to get the central GST laws passed by Parliament in the second half of budget session now,” Pratik Jain, partner and leader -— indirect tax, PwC, said.

Under the Constitutional Amendment passed by Parliament for GST, some of the existing levies will expire after September 16. 

“What remains now are the rates for goods and services which I am sure will be decided in March,” Harishanker Subramaniam, national leader — indirect tax, EY India said.