With Union Finance Minister (FM) Arun Jaitley and state FMs busy grappling with demonetization crisis and not being able to give enough time for finalising the three draft laws for the proposed goods and services tax (GST), the crucial meeting of the GST Council that was to be held on Friday has been pushed back by a week to December 2-3.
The government is looking to introduce three draft Bills – central GST (CGST), integrated GST (IGST) and compensation law – in the ongoing winter session of the Parliament that ends on December 16. The Council was to meet on November 25 to finalise these draft laws.
And even as the government statement says: "the states desired some more time to internally deliberate on revised draft of the laws within their respective states," many believe that the FMs, particularly Jaitley, were too tied up handling the situation that has arisen due to demonetization, which could have dire political repercussion if not managed well.
Bhavna Doshi, senior advisor, KPMG, said she had not heard of any differences on GST that were not resolvable between states. Her guess was that the bureaucrats and ministers were just not able to give time to it. "My guess is that this is not because of differences on GST (between states and Centre), but probably because of demonetization. The time that finance minister and others have to put in addressing the challenges of demonetization, I think that is the reason, probably, they had to postpone the meeting. The ministers may not have had time to discuss the (GST) issues," she said.
She added; "that's (demonetization) a priority. Everyone needs to be out on the ground to handle the situation. If people (FMs) are around it and if they are able to take decision, it will get handled better, otherwise it will go out of hand".
According to her, in normal circumstance, the Council would have met and finalised the draft legislations for the unified indirect tax, which is expected to be rolled out in April next year.
Doshi fears that if the laws do not get cleared in the current Parliament session then it could get pushed back by three months.
The finance ministry said the officers' level meeting of the states and the Centre was held on Monday and Tuesday and they will now meet on Friday to get the draft GST laws ready for placing them before the Council.
Haryana Finance Minister Captain Abhimanyu Singh Sidhu told DNA-Money that GST was 'on track' for a roll-out by April, 2016. He said whatever were the differences between the states and the Centre, they were "resolvable".