There is a lot of buzz on the GST in India again for about last 45 days or so when the Model GST Law has been announced. There are lots of discussions, views, articles on the Model GST Law on the pros and cons of the same. For GST to be a reality in the near future or a dream forever (for the obvious reason that there is no consensus among all the political parties).
This is a pic taken during my recent trip to Meghalaya
For Goods and Service Tax to be implemented in India, these are steps to be followed
- Get all the stakeholders i.e. political parties consensus on the RNR and tax administration (seems to have been achieved to a greater extent based on the meeting of state Finance Ministers and Central Finance Minister)
- Cabinet note to be approved for the changes proposed in the State Finance Ministers meeting on 26th July 2016. It got approved based on the articles on various news sites.
- As per plan allow discussion / debate agreed on in Business Advisory Committee for 5 hours in Rajya Sabha before the curtains pulled out for the monsoon session. Not listed in the list of business for 28th July 2016 or on 29th July 2016. Need to wait and see when the same will discussed.
- Table the revised Constitutional Amendment Bill – One Hundred and Twenty-Second based on the cabinet note approved on 27th July 2016 for voting and get the same passed with 2/3rd
- Once the bill is passed, send the same to Lok Sabha for voting, as there are changes to the bill based on the select committee recommendations and discussion based on state finance ministers meeting.
- Once approved in Lok Sabha, the bill has to be sent to the President for his assent.
- Since it is a Constitutional Amendment Bill at least 15 states have to pass the bill in their respective state assemblies.
- GST Council has to be constituted and it has to conclude on the rates for GST, abatement if any, list of goods under reverse charge, negative list of goods and services, etc
- Views of the trade, industry and citizens of the nation on The Model GST Law has to be considered and incorporated based on the suggestions given. Get the nod for the same from the State Finance Ministers on the proposed changes.
- Formulate the same into a bill and get the Cabinet approval
- Introduce the CGST and IGST Bills in Lok Sabha
- CGST and IGST Bills to be passed in Rajya Sabha ( to be tabled as Finance Bill or Monetary Bill to be decided) during the Winter Session of Parliment
- On a parallel track, the IT infrastructure of the state and central tax departments have to be scaled up to meet the GST requirements of capturing transactional level data right from the Day one. Alternatively, we can go for the summary returns in the beginning and then scale up to this level at a later point of time and amend the reports. It may look simple but will be a challenge to implement the same.
- Training of the Tax officials of both the State and the Central to gear up for the new tax regime
- Industry has to train its teams to brace for the changes
As of now, we have achieved only the first step, still have a long road to travel. The rollout date of GST on 1st April 2017 seems to be very ambitious. The possible dates can be 1st July 2017 or 1st Oct 2017 or 1st Jan 2018. The date of 1st Jan 2018 can also be considered if the Central Government decides to change the financial year from Apr -March to Jan – Dec, this date would be idle but can have a negative impact on the upcoming Central elections on account of inflation. Though inflation on the implementation of GST is global trend, in India we may not have as we already have taxes at higher rate.
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