GST roll-out deadline deferred to July 1

The Goods and Service Tax (GST) council, headed by Union Finance Minister Arun Jaitley, on Monday met to break the deadlock over who gets to administer the GST and managed to achieve consensus on the 'dual control' or 'cross empowerment' issue, deferring the deadline for its roll-out to July 1.

Jaitley interacted with the media after the meeting between the states and the Centre said that July 1 appears to be the 'most realistic date' to roll out the tax regime and further enumerated the key points that were discussed. He also said that the council will again meet on February 18.

 

"The entire taxation base will be shared between the assessment and machinery of the Centre and the states. Among the assesses with a turnover of Rs. 1.5 crore or less, 90 percent will be assessed by the states and 10 percent by the administrative machinery of the Centre. Those with a turnover of more than Rs. 1.5 crore will be assessed on the ratio of 50:50 by the states and the Centre," Jaitley said.

"There will be intelligence-based enforcement and powers will vest both in scrutiny and audit. The power to levy and collect the Integrated GST (IGST) is with the Central Government, but by a special provision in law the states will also be cross empowered in the same manner of the raio mentioned earlier," he added.

Thereafter, Jaitley came to the issues that were discussed.

He said, "In the exercise of IGST, there were contentious issues between conflicting states with regard to place etc.... As far as the area of 12 Nautical Miles into the territorial waters is concerned, it's a part of the Union Government Territory. But as per a convention, the states will be empowered to collect taxes on any economic activity in this territory. This decision has been taken after wide consultation. It was debated, improved upon, and finally agreed upon."

Jaitley also spoke about West Bengal Finance Minister, Amit Mitra who was the only minister to disagree with the division of power.

"All the ministers present agreed to the proposal except the West Bengal Minister whose dissent was confined to the issue that the 90:10 ratio should become 100:0. On all other proposals, he also agreed," Jaitley told the media.

The Union Minister then detailed on the timeline of the tax regime.

"The agreement today will have to be incorporated with legislations. This will gave impact on the IGST law, the Compensation Law, the State GST (SGST), and the Central GST (CGST). Once those drafts are approved, they will go to the respective legislative bodies for approval. Simultaneously, after they are free from the preparations of this draft, the officials, who are lending technical support, will start working on the fitment of the rates into the various slabs," he said.

"This exercise will, in all probability, take us to the month of March. The ministers and council then assessed the realistic date when these can take place. There was a broad view that July 1 appears to be the most realistic. Since it's a transactional tax, it can be introduced at any time. Also, the ministers felt that the industry and traders will have to be given adequate time. And once the rates are decided, the system of GST will have to be modified accordingly. So, our next meeting will be on February 18," he added.

The Budget on February 1 was expected not to include excise duties and service tax as the government was hopeful of rolling out GST from April 1, 2017.

The constitutional amendment containing the GST was passed in August, 2016.

GST is expected to transform India into a single market by subsuming indirect taxes levied by the Centre and states, including excise duty, VAT, and service tax among others.