What if Bengal doesn't launch GST from July 1
NEW DELHI: West Bengal's threat of not going ahead with GST from the scheduled rollout date of July 1 may end up adversely impacting consumers and manufacturers in the state, albeit for around 75 days.
Following last year's amendment to the Constitution, by mid-September, all states and the Centre have to move to GST and do away with multiple levies such as excise, service tax, VAT, central sales tax and entertainment tax. If the other states and the Centre stick to the July deadline, until mid-September, producers in other states will ship goods to West Bengal after paying Integrated GST and Central GST, while the state government will impose other levies, icluding VAT. Unlike rest of the country, input credit or credit for taxes paid will not be available to companies for goods sold in West Bengal, resulting in consumers having to shell out more, or face the prospect of supplies being slowed down, said experts. The state government has called for a deferment, arguing that small and medium enterprises are not prepared and also demanded a review of taxes on products such as footwear and multiplexes. State finance minister Amit Mitra had said differences need to be sorted out before he moves the State GST Bill in the assembly. "If a state does not enact the SGST law before July 1, then supplies made within the state will be costlier given that both CGST and VAT may apply. Similarly supplies made to outside the state would also be costlier assuming input VAT credits would not be available," said Bipin Sapra, partner for indirect tax at consulting firm EY. Manufacturers sending goods to other states will have to pay IGST and CGST in addition to local levies. Again, they would be at a disadvantage. Given that West Bengal is a consuming state, even the state government is seen to be a loser if it doesn't move to GST from July. And, in any case, it will lose out on possible compensation for revenue loss for this period, experts added. "The introduction of GST is at such an advanced stage that it is fervently hoped that all states continue to display the same spirit of cooperative federalism that they have displayed in the GST Council meetings held since February 2017," said M S Mani, senior director at Deloitte.