The central government today formally accepted that it will not be able to meet the April 1 deadline for implementing the Goods and Services Tax (GST). The new deadline has been set for July 1, 2017.
At the end of the ninth GST Council meeting, finance minister Arun Jaitley said: “The broad consensus among states is that July 1 seems more realistic”.
But many states hinted that even the new deadline looks difficult to meet. “A lot of work is left, in fact, thirteen things need to be done before we even consider implementing GST. So I don’t want to comment want to on whether the July 1 deadline can be met,” said West Bengal finance minister, Amit Mitra.
Jaitley said that Monday say consensus on tax on territorial waters and dual control, which deals with who taxes whom between the states and the centre.
90% of taxpayers with up to Rs 1.5 cr annual turnover will be assessed by states, 10% by Centre, while half of those above Rs 1.5 cr to be assessed by the centre and the remaining half by states.
“States to be empowered to tax any economic activity in territorial water up to 12 nautical miles,”said Jaitley resolving an issue that had emerged in the past Council meetings.
But state finance ministers point out that there are several other issues that need to be resolved before GST can be implemented.
“While the 4 tax slabs for GST have been decided, but which goods and services is put in which slab is yet to be decided,” said a state finance minister who did not wish to be quoted.
Three legislations need to be ironed out before GST is rolled out: CGST, IGST and SGST. The Council has to approve these before the legislations are placed for vetting before the state assemblies and the Parliament.
Several states also have concerns about the dispute resolution mechanism once the new indirect tax is implemented and the Council is yet to give its final seal of approval to the compensation issue.
Experts have cheered the move to formally defer the GST deadline. “With indication of revised implementation date of July 1, 2017 for GST, industry gets much needed clarity and some additional time for preparation for this huge reform,” said Pratik Jain, partner and leader, indirect tax, PwC.
“What remains now are the rates for various goods and services which I am sure will be decided in March 2017,” said Harishanker Subramaniam, national leader, indirect tax, EY India.