It is official now. The country may miss the April 1, 2011 deadline for adopting a dual goods and services tax (GST) system. The Finance Minister, Mr Pranab Mukherjee, has now conceded that it may not be possible to introduce GST from April 1 next year. The main bottleneck in achieving this major tax reform is the absence of consensus between the Centre and the States on the required Constitutional Amendment for introduction of GST.
A Constitutional amendment is necessary as States are looking for powers to tax services and the Centre is looking to tax goods up to the retail stage.
“I had tried my best to introduce the Constitutional Amendment Bill for GST in the last monsoon session of Parliament itself. But for certain reasons beyond my control it could not be tabled in the last session. Since we could not place the Bill in the last session, it may not be possible to introduce GST from April 1, 2011,” Mr Mukherjee said at a review meeting with top officials of the income tax, customs and excise department in Mumbai on Wednesday.
The Finance Minister highlighted that the GST legislation both at the Centre and the States can be undertaken only after the Constitutional amendment. At the same time, he advised the excise and service tax officials that there should be no let up in their ongoing work relating to GST.
Ministry instructions
Mr Mukherjee asked the service tax and excise officials to initiate dialogue with the State Government authorities as a way of familiarisation, “since ultimately when the central GST and State GST come into effect, you will have to work in tandem.”
The Finance Minister also asked the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) to constitute standing committee at the Chief Commissioners’ level for litigation management.
Moreover, all the annual general transfers should be carried out by both the boards by the month of April, Mr Mukherjee said. The Finance Minister also asked the Revenue Department to create a formal risk management institution to improve the voluntary tax compliance in India.
