Just as we stand at the cusp of introduction of revolutionary Goods and Service Tax (GST), Budget 2017 is potentially the last Budget to deal with existing Central Excise and Service Tax. GST is a definitive step towards co-operative federalism. Finance Minister Arun Jaitley during his Budget speech, without mentioning any date as such, indicated their attempt to achieve the goal of implementation of GST as per schedule.
The Budget documents on fiscal policy clearly suggest that introduction of GST coupled with broadening the base in direct taxes will improve the tax to GDP ratio in the medium term. It is expected that this will be at 11.6 per cent in 2018-19 and 11.9 per cent of GDP in 2019-20.
It cannot be denied that ever since the passage of Constitutional Amendment Bill, there has been significant progress made to implement GST. Some of the significant issues like the model regulations, rate structure of GST, administrative control, compensation to the States, threshold exemption etc. have already been agreed to at the GST Council.
The next step would be to get a final approval from the GST Council and table the GST Bill for enactment. Going by the way things are moving, it is possible that the Bill will be tabled in the second half of the Budget session commencing on 8 March 2017.
States would equally need to pass their State GST (‘SGST’) law in their sessions. While there is going to be a race against time, it would be essential that the stakeholder get their chance to provide feedback and concern on the law, before it is made available in the parliament.
While it may be noted that Jaitley did not indicate any definitive timeline for introduction of GST, trend of the amendment carried out in granting exemption to goods like Micro ATMs, fingerprint scanner, mPOS and parts and components used for manufacture of these are extended till 30 June.
Could this be an indicator that GST is going to be implemented from 01 July 2017?
While most of the industry has already started preparing for GST, there are still several medium to small companies that are waiting for clarity on the final date.
GST is not just going to be a tax reform but is a business reform that touches upon every aspect of the business — be it IT system, pricing, supply chain, etc. The clock has started ticking and it would be essential to start preparing for GST to enable a smooth transition and reap the benefits and opportunities that GST brings with itself.