1. Don’t delay GST, run it as pilot from July 1, and implement it fully from September 1

Don’t delay GST, run it as pilot from July 1, and implement it fully from September 1

The industry needs time to adopt the goods and services tax (GST), but that can’t be a reason for avoiding its implementation from July 1 – the government must utilize the time between July 1 and September 1 to fine-tune the administrative framework by running GST as a pilot project across the country.

By: | Published: March 30, 2017 5:44 PM
The industry needs time to adopt the goods and services tax (GST), but that can’t be a reason for avoiding its implementation from July 1 – the government must utilize the time between July 1 and September 1 to fine-tune the administrative framework by running GST as a pilot project across the country. (PTI)

The industry needs time to adopt the goods and services tax (GST), but that can’t be a reason for avoiding its implementation from July 1 – the government must utilize the time between July 1 and September 1 to fine-tune the administrative framework by running GST as a pilot project across the country.

Finance minister Arun Jaitley tweeted after the passage of GST laws in the Lok Sabha: “I congratulate everyone on the passage of GST Laws by Lok Sabha. It is a landmark tax reform since independence. A historic day for all of us.” This has clearly made the implementation of goods and services tax (GST) across the country a certainty as getting these supporting GST Bills passed from the Rajya Sabha remains just a formality now considering their Money Bill status, despite the ruling dispensation not having a majority in the Upper House.

So, the bigger question now is whether the GST will come into force from July 1 or September 1, as this has to be done before September 15, as stipulated in the GST Constitutional Amendment legislation. The July 1 date is certainly a challenging one as the final contours of the GST framework, including rates of different items, are expected to be finalised in April-May – and the industry’s apprehensions on the preparedness to meet this deadline is quite logical.

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But, it is also a fact that basic preparation for handling GST, both at the administration and the trade and industry level, has been going on for quite some time now. In this backdrop, instead of deferring the GST implementation until September 1, completely, the government may start the process from July 1 on a pilot basis and tell the industry and the administrative machinery to experiment and fine-tune the processes and norms in the next two months.

This will prepare stakeholders across the board to embrace GST in full swing from September 1 and will help avoid problems in the initial stages of implementation. After the passage of the supporting legislations in Parliament, the GST council is now set to finalise draft rules in its meeting on Friday, and the government is also in the process of finalizing the procedures and tax rates in consultation with the industry in due course.

The intention clearly is to try and bring GST into force from July 1, but there is no harm in observing the adoption of GST for a few months and then enforce it fully. This will take care of the industry’s apprehensions and also the concerns related to the GST infrastructure in a much better manner to ensure a smooth transition.

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