NEW DELHI: India’s march toward a common market took another big step, increasing the possibility of the long-awaited goods and services tax (GST) being rolled out on April 1 next year. On Monday, the union cabinet approved the establishment of the GST Council, which will decide on the rate, exemptions, threshold and relevant legislation by November 22.
The first meeting of the council, to be chaired by Union Finance Minister Arun Jaitley , will be held on September 22 and 23. Revenue Secretary Hasmukh Adhia said the government is ahead of schedule on the GST rollout and is set to put it in place by the start of the next financial year.
In another key decision, the Cabinet Committee on Economic Affairs approved a bigger 20 lakh tonne buffer stock for pulses to check periodic price spikes even as the latest data showed a sharp decline in inflation. Other members of the GST Council will be the union minister of state for finance in charge of the revenue department and state finance ministers. The union revenue secretary will act as the ex-officio secretary without voting rights. The finance ministry has already asked states to send the names of ministers they wish to nominate.
“The main thing to be done now is to call as many meetings of the GST Council and try and sort out all the major issues so that we are ready with the draft law completely and industry can get itself ready ,” Adhia said. The cabinet also approved the setting up of an attached GST Council secretariat.
GST is regarded as India’s biggest tax reform since independence and will provide an estimated 1-2 percentage point boost to the economy by subsuming a plethora of central and state levies and creating a seamless national market. First mooted more than a decade ago, GST was to have been in place by 2010 but was held up due to lack of political consensus.
Jaitley said last week that the April 1 deadline was a stiff one but that the government was trying to keep that date. Having overcome resistance in Parliament to the constitutional amendment that paves the way for GST, the government has lost little time in pushing the process forward.
“It is good to see the cabinet approving the creation of the GST Council within a few days of presidential assent of the constitution amendment bill,” said MS Mani, senior director, Deloitte Haskins & Sells LLP .”The creation of the GST Council will enable the government to move ahead with its decision to introduce GST from April 2017.”
TWO MONTHS TO THRASH OUT ISSUES
Adhia said the GST Council had two months to thrash out issues.
“We have set a time limit of two months for discussion and final decision on all the major aspects,” he said. “Now whether that’s going to be feasible, that we have to watch and see. So from September 22 to November 22, should be a reasonable time limit for discussing and thrashing out the major issues.”
Asked if the GST rate, exemptions and threshold would be decided by the council before November 22 for inclusion in the central GST law, Adhia said: “It should be, yes.”
The government is looking to introduce the central GST (CGST) and integrated GST (IGST) legislation in the winter session of Parliament in November. State assemblies will also have to approve GST legislation.
“Implementation of GST from April 1, 2017, would be contingent upon the speed at which the GST Council is able to build a consensus on issues such as rates, exemptions, dual control etc.,” said Pratik Jain, leader, indirect tax, PwC India. “The central government seems to be making all efforts to meet this deadline.”
‘COS NEED TO SPEED THINGS UP’
Industry has sought six months from the day that the GST law is finalised for internal preparations but experts say companies will need to speed things up.
Credits ET Realty