GST sure to miss April 1 deadline
Deadlock over right to control assessees continues
The April 1 deadline for the launch of goods and services tax (GST) appeared increasingly uncertain on Wednesday.
With the Centre and states unrelenting on their positions over right to control assessees and taxing high-sea trade in the new indirect tax regime, the government’s deadline now seemed difficult to meet.
The two-day meeting of the all-powerful GST Council made little headway on other key issues, including integrated GST (IGST) with states like Kerala and West Bengal, which make September as the most likely deadline. But Union finance minister Arun Jaitley, who is also chairman of the all-powerful GST Council, hoped that the vexed issues would be resolved at the next meeting of the joint forum.
“The IGST law, having 11 chapters, was discussed today. The initial 10 chapters have been approved and some issues remain open because they are in the process of being discussed. We will be meeting again, because the nature of discussion was inconclusive, on January 16 and have a seating to conclude the discussion on those specific points,” Jaitley said.
However, with some non-BJP states hardening their stands on key GST issues post-demonetisation, it is unlikely that they would budge even in the next GST Council meeting.
With the Centre repeatedly stating its intention to resolve issues through consensus, it may take a step back to accommodate states' demand.
But experts warned that the Centre may put the sticky issues to vote in case the logjam continues.
“The Centre after taking heavy criticism in the first two years when they did not listen to anybody, is now following the principle of taking everybody on board. I think they are exceedingly polite. But if tomorrow there is stalemate nothing stops the FM to put the matter to vote. And there, in the current situation he has 3/4th vote,” said Amit Kumar Sarkar, an indirect tax expert following the developments closely.
The next meet of the GST Council would discuss the issue of jurisdiction over assesses, as well as try to reach a finality on taxation of territorial waters. Kerala finance minister Thomas Isaac said the other remaining issues before the Council included ways to fund the compensation to states and their role in the IGST.
“Working overtime, it should be possible to meet the deadline of September. I am not very optimistic about rolling GST out in June/July. Because it is a new tax and there are a lot of complexities involved, it would be better to move in after full preparation. So GST, to my understanding, will be implemented from September,” Issac predicted. He further said that some states wanted the GST revenue from the highest tax bracket to be shared in 60:40 ratio with the Centre, instead of the present 50:50 sharing.
Some tax experts rued the delay in rolling out GST, which has been the signature reform of the Modi government and is seen as a game-changer.
“After having covered so much ground to implement GST on 1 April, it is unfortunate to see the deadline drifting away owing to the increasing number of issues between Centre and states such as control of assesses, jurisdiction over matters pertaining to territorial waters, rate split and IGST,” said Krishan Arora, partner, Grant Thornton India.