The agreement on dual control of tax assessee thrashed out between the Centre and the states, is without doubt, a big win for finance minister Arun Jaitley. Indeed, thanks to some tough bargaining by the states, especially after the political standoff on demonetisation, GST was threatening to become a non-starter. But the thorny issue of dual control has been resolved in principle with above assessees over Rs 1.5 crore turnover shared 50:50 by the Centre and the states, and those below Rs 1.5 crore turnover shared 90:10 in favour of the states. The levy could now be in place as early as July 1.
The deferment is indeed positive for the industry as it will give more time to prepare for the roll out and greater clarity, experts say. With the new assessee base sharing agreement and with the implementation date moving further to July 1, here are the things experts say to watch for.
Basis of jurisdiction:
“It needs to be seen as to what basis would be adopted to exercise the jurisdiction in the proposed split by states and centre,” Krishan Arora, Partner, Grant Thornton India LLP, said.
Dual compliance and rejig of year-end activities:
“With FM’s indication of a revised implementation date, industry players would now need to revisit their GST transition strategy with a backup plan for few months rolling over beyond 1 April 2017 resulting in dual compliance,” Grant Thornton India’s Arora said. “It could also pose certain additional challenges for many organized players with regard to their year-end activities including areas such as inventory planning, budgeting, working capital, etc. which were aligned to a timely GST rollout,” he added.
Timely finalisation of GST rules crucial to achieve July 1 deadline:
“Even to achieve the deferred date, finalisation and publication of GST laws without further delay would be important for India Inc to effectively prepare for migration to the new regime,” Rajeev Dimri, Leader, Indirect Tax, BMR & Associates LLP, said. “Next critical aspects to be watched out is GST Council’s discussion on supporting GST legislations, publication of rules and GST rates. Clarity on these aspects is critical for India Inc to analyse GST impact on their business to realign their systems, processes, operations, pricing structures and logistics by the go live date,” he added.
Deferment is pragmatic:
“With indication of revised implementation date of July 1, 2017 for GST, industry gets much needed clarity and some additional time for preparation for this huge reform. It appears that the government would be able to get the central GST laws passed by the Parliament in the second half of budget session now,” Pratik Jain, Partner and Leader – Indirect Tax, PwC, said.
“The decision on deferment of GST to July is pragmatic. A well thought through implementation post meticulous discussion on the draft legislations is far more desirable than a premature rushed through roll out,” BMR & Associates’ Dimri said.
“Government has felt pain of industry and decided to give them ample time to make required changes before getting GST implemented,” Rakesh Bhargava, Director, Taxmann, said.
“(It) gives some time for industry to prepare,” Harishanker Subramaniam, National Leader – Indirect Tax, EY India, said.
“What remains now are the rates for various goods and services which I am sure will be decided in March 2017,” EY India’s Subramaniam said.
Earlier November, GST council agreed on a slab structure with rates at 0%, 5%, 12%, 18% and 28% for implementing GST. Having a slab rate structure in GST is departure from popular international practice of having one rate of tax for all goods and services. However, it is yet to be seen which goods and which services will fall under each slab.