The government could be looking at rolling out the country's biggest indirect tax reform from mid-2017, realising that it may be an uphill task to have all the pieces for GST rollout in place by April 1, the start of the fiscal.
The central Goods and Service Tax (GST) and integrated GST laws may make it through Parliament only in the budget session, not leaving much time for preparation for the industry.
"All options are open... The target date is April 1 and effort will and effort will be to keep it," said an official, but added that the industry has sought six months for preparation from the time when the law and rules are finalised.
The finance ministry has had a series of consultations with representatives of various sectors who were asked to give their views on being comfortable with a June or July, 2017 rollout. The government wants the industry to put its house in order soon after the final draft of the law are made public, said a second person privy to deliberations.
As GST is an indirect tax, a midyear rollout does not create much issues. It may be recalled that the negative list regime for service was introduced from July 1, 2012.
Experts said it would be preferred if the new regime is rolled out after adequate preparation, even if it is in the middle of the year. "It can come in any quarter of the year if they are ready.... It is better to launch it after proper preparations," said S D Majumder, former chairman of Central Board of Excise and Customs.
The GST Council, chaired by finance minister Arun Jaitley with state finance ministers as its members, has to finalise the rates, base, exemptions, tax holidays, and administrative setup, besides the law and rules.
All the open issues plus the law have to be ready well in time so that it can be introduced in the winter session, which usually begins in late November or early December.
The law would then go through the parliamentary process, including vetting by a standing committee, before it is taken up for passage. State assemblies would then have to ratify state GST laws.
Though IT firms are ready with their enterprise resource planning software, these would need to be tweaked in accordance with the final law. These would then have to be tested by the companies.
"Industry needs to align its systems... with the GST law...This would require 6-9 months once the law is finalised," said Bipin Sapra, partner at EY.
ET view: Don't delay
Missing one more deadline will be unfortunate. True, for the switch to GST, Parliament has to pass the central GST and on IGST law, and states must pass state GST laws. The core issue will be agreement on rates of tax and working of GST Council. The govt must engage with states and Opposition to ensure the rollout on April 1. If it stretches into 2017-18, chances of its implementation would become slimmer.
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Courtesy: The Economic Times
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