Dr. Sanjiv Agarwal

We often hear that Government is working hard to see that it is able to introduce dual GST in country w.e.f. 1st April 2017 and at the same time a caveat that the target is stiff and there may be some time overrun.

GST implementation is the top most priority at present for the Government. Recently, at a recent event of ‘The Economist – India Summit 2016’, Finance Minister made a statement on GST being implemented w.e.f. 1st April 2016 that “we look ahead, it is a very stiff target and we are running against time. I would certainly like to give it a try”. At the moment, the Constitutional Amendment Bill has already been ratified by more than the required number (16) of States, i.e. 18 States, and has received President’s assent on 8th September, 2016 to become an Act. Constitutional Amendment Act has been notified vide Gazette Notification 55 dated 08.09.2016 and GST Council also constituted / approved by the Union Cabinet. The Council has to take up certain pending and unresolved issues before it such as dual control, rates of GST, dispute resolution methodology etc. The introduction of GST Bills in Parliament and State Assemblies in forthcoming winter session would be subject to decision on these issues at the GST Council. If this is missed, April 2017 will be extremely difficult. If it is pressed, it may end up to be a mess which should be avoided at any cost.

No doubt, the task is tough as well as long – both politically and logistically. It has to be launched at one go across India (unlike VAT) and from a common date failing which there will be distortions, injustice to stakeholders in State(s) who do not agree to do so and economically unviable to businessmen.

If there are some over runs in terms of time, no body including Government should worry. In fact there is nothing to lose and if we can have a smooth and robust GST regime a bit later. There is no harm in it at the cost of slight more delay. Heavens are not going to fall.

It is desirable to have transparency in drafting final provisions. Since the time the model law has been placed in public domain, there have been more than 40,000 suggestions / feedback on the same from different stakeholders including trade and professional bodies. These need to be considered and fairly dealt with to come out with a refined version of model law which should again be placed in public domain (may be for a short period of 15 days) for further concerns / issues to be pointed out. After all, law is to be implemented by Government and complied with by tax payers. Such a major tax reform can not be allowed to be passed in haste, just to meet a date which was never a concern till now. Then rules and forms ought to be discussed. This becomes necessary as till now, GST law has been framed by tax collectors. Ideally various regulatory authorities and major stakeholders such as SEBI, RBI, stock exchanges, IBA, CBDT etc should also comment on the same. Comments may also be sought from MCA specially on accounting standards, accrual accounting and compliances.

The tasks now are difficult and hard, i.e. fixing GST rates, deciding the final provisions of law, how to settle disputes and above all, how to handle taxpayer’s interface with dual control setup by centre and states. Taxing inter-state supply of goods within organization and matching of invoices is going to create headache for everyone.

GST, once implemented, is expected to have a transformational impact by creation of a seamless national market in the country for the first time which will also provide a transfer mechanism aiding consuming states. Since GST rate is likely to be revenue neutral rate, Government believes that impact of GST would be positive in long run and at the same time will not hurt the consumers or tax payers.

The key to success of GST lies in unbiased and selfless wisdom of members of GST Council who will keep nation’s interest at the top.

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