New Delhi, January 3, 2017

Call for mid-year implementation; Council to discuss dual control today

The prospects of a rollout of the Goods & Services Tax regime from April 1, 2017 appeared to recede further on Tuesday after representatives of States expressed concern about the timeline at a meeting of the GST Council.

With just three months to go, many States as well as experts have suggested that a mid-year rollout from July 1 or September 1 may be more feasible.

The issue of administrative control over businesses still remained untouched as the GST Council started its eighth round of meetings. The Council discussed the draft Integrated GST Bill and also heard out sectoral presentations of the impact of the indirect tax levy.

At the conclusion of the first day of the meeting, Delhi Deputy Chief Minister Manish Sisodia said, “It may difficult to meet the (April 1) deadline.”

Kerala Finance Minister Thomas Isaac noted that even if the GST laws are passed in the Budget session of Parliament, the rollout would have to be pushed to June or July owing to paucity of time.

Gujarat, too, is understood to be in favour of a rollout of GST from September 1.

Apart from the lack of time, sources said some States want the economy to fully stabilise after the demonetisation of ₹500 and ₹1,000 notes before introducing the GST regime.

Finance Minister Arun Jaitley has said the government will make all efforts to introduce GST from April, but he has also indicated the possibility of a mid-year rollout as it is a transaction tax. According to the Constitution Amendment Bill for GST, the government has time till September 2017 to roll out the tax.

Meanwhile, Sisodia said the issue of dual control was not discussed in the meeting, which only focussed on the draft model Integrated GST Bill (IGST).

Dual control and cross-empowerment will be taken up on Wednesday. State Finance Ministers will also present their pre-Budget recommendations and inputs to Jaitley on Wednesday.

Most States seem to be sticking to their stand on the issue; Isaac said that Kerala would stick to its demand for exclusive control of businesses with an annual turnover of ₹1.5 crore.

Higher compensation

Kerala also wants the Centre to share more items under IGST with the States; it wants cess to be levied on more items in addition to those on the the list of demerit goods that has been agreed upon. This will help States secure higher compensation for revenue loss.

Apart from Kerala, West Bengal argued for a higher cess on the grounds that States would face more revenue loss post-demonetisation.

“The revenue loss from GST rollout post-demonetisation could be as much as ₹90,000 crore,” said West Bengal Finance Minister Amit Mitra, adding that the State’s tax revenue has dipped by 30-40 per cent after the note ban.

The Council, led by Jaitley, also heard presentations by officials and Ministers heading six sectors, including commerce and industry, banking and insurance, civil aviation, railways and information technology, to understand the impact of GST on products.

The meeting also did not reach an agreement on the definition of the territory of the Indian State. “Legal opinion will be sought on including 12 nautical miles offshore within India’s jurisdiction for levy of GST,” said Mitra.

[The Hindu Business Line]