In various Union Budgets since 2005, the “progress” on the introduction of the Goods and Services Tax (GST) has been limited to the finance minister announcing he was happy with the progress being made by the empowered committee. It seems unlikely that the Budget speech this year will have anything more substantial than this.
Could there be more substantial progress? It’s possible. Actually enacting the GST law is out of question, since it requires an amendment to the Constitution of India. Introducing the amendment Bill during the Budget session also seems extremely unlikely, since there has not been any sign till now of a consensus having developed among political parties.
There are, therefore, two possibilities: One, the government could either release the draft GST law for public comment, or announce a definite date for release of the draft law.
This would go a long way in dispelling the apathy that currently greets any announcement of the implementation of GST.
The second possibility relates to the Central Sales Tax (CST). It is incompatible with GST and would have to be abolished at the time of the implementation of GST. CST was to be phased out over a period of time. After an impressive beginning, when the rate was reduced from four per cent to three per cent and then to two per cent, there has been no movement on this since 2008. If the government were to reduce the rate of CST to one per cent or abolish it altogether, that would be a very impressive and concrete sign of its resolve to bring in GST.
On the other hand it would not be very surprising if all that happened was for the finance minister to proclaim his satisfaction with the progress made by the Empowered Committee.
Vivek Mishra
Leader (Indirect Tax), PwC India