A delay in the rollout of a nationwide goods and services tax appeared imminent on Sunday as a council deciding on its implementation didn’t reach consensus, indicating that relevant legislation won’t likely be tabled in Parliament’s ongoing winter session.
Sources said the GST – which aims to stitch together a common national market and abolish region-specific levies – could see an implementation delay of three months after a two-day GST council meet was cut short to one day with no consensus.
This indicates any bills on GST cannot be taken up during the winter session, which ends on December 16. The next meeting is scheduled for December 22-23.
But the government said it is still sticking to its original rollout target for the new tax structure: April 1, 2017.
“Our target is 1st April, we will stick to our target…the luxury of time is not available to us,” Union finance minister Arun Jaitley said, adding that there was a constitutional compulsion of implementing the new indirect tax structure by September 17, 2017.
The bills would now be taken up in the upcoming budget session that is slated for January-end. But sources said the budget session might be advanced by a week to ensure enough time for the passage of the central GST (CGST) and integrated GST bills.
The government’s surprise recall of Rs 1,000 and Rs 500 notes last month – which has hurt state revenues – has derailed the GST process that was “going on smoothly”. The decision to junk high-value banknotes has also stalled Parliament that has seen little business transacted this session.
Jaitley said that the critical of issue of dual control -- whether the Centre or the state will have authority on GST assesses -- had not been taken up in Sunday’s meeting.
A senior finance ministry official said with time running out, the option of putting the issue to vote cannot be ruled out. “While we would want all issues to be resolved through consensus, the option of voting has to be considered in case there is no breakthrough,” the official, on condition of anonymity, said.
Amit Mitra, West Bengal finance minister and chairman of the empowered committee of state finance ministers on GST, recently said the roll out of GST would have to be deferred as the economy has been disrupted by the demonetisation exercise.
However, the finance ministry official said BJP-ruled states were in favour of GST implementation. “West Bengal and may be just a few others are opposed to this…all other states want GST to be implemented, so there should not be a major problem,” he said.
But independent experts weren’t as upbeat and hoped the Centre and states would work together to make the bills reach Parliament in the budget session.
“April 1, 2017 seems a stretched target now and a minimum of three months delay looks quite imminent,” said Pratik Jain, partner and leader indirect tax at PricewaterhouseCoopers.