The 17th GST Council meeting held on June 18 concluded with a loud and clear message that GST will finally see the light of the day on July 1, 2017. It would indeed be a watershed moment for India as the biggest tax reform—more than ten years in the making—will finally take-off. Whoever has witnessed this arduous journey of the GST, from a simple idea of one national GST with a single rate for goods and services to a complex dual GST structure laced with multiplicity of rates will certainly heave a sigh of relief now that the implementation date has been cast in stone. Some states are yet to pass their respective SGST Bills, and it is hoped that they would do so by June 30 or come out with an Ordinance to make GST applicable in their jurisdiction. The GST Council is scheduled to meet on June 30 which would be its 18th meeting since its inception. It is a great achievement on the part of the government to successfully convene the Council meetings with an average of two meetings per month in a span of about nine months. The enthusiasm and the zeal with which the Centre and the states dealt with every aspect of the GST during these months is commendable. One hopes that the same continues post the implementation date as the GST agenda is unfinished yet.
The registration module for new GST registrants is expected to open on June 25. A large number of businesses having pan-India presence and a centralised service tax registration for all locations in the country are expected to commence state-wise registrations. A fast-track mechanism for allotting GSTIN to these and new businesses should be put in place as there would be hardly any time left for the go-live date. GST compliance has been pushed back by two months, and the businesses are expected to file simplified return formats for the first two months (July and August). While this certainly is a welcome move, businesses would now have an additional burden of filing one more GSTR form, albeit in a simplified manner. The e-way bill mechanism has not yet been finalised, and the states have been instructed to continue with the mechanism currently being followed by them in the VAT regime. Now, not all states have road permit/way bill in their VAT laws. Hence, it is imperative that the movement of goods is not hampered post July 1 on account of the requirement of way bills/road permits. It would have been better if the road permit/way bill mechanism was kept in abeyance throughout the country until the e-way bill mechanism is finalised and it would be best if the e-way bill mechanism is completely done away with. A complete audit trail of movement of goods is going to be made available on the GSTN portal vide the uploading of inward/outward supplies data. Burdening the businesses with uploading data for e-way bills again is certainly avoidable.
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Another concept which requires a hard look is the Tax Deducted at Source (TDS) mechanism in the GST. Since the GST would be a destination-based consumption tax, TDS, a direct tax concept, does not have any place in GST. The TDS mechanism is rightly absent in Excise and Service Tax laws. The state sales tax departments had introduced this concept while dealing with works contractors. Now that we have a complete trail of inward and outward supplies, the TDS mechanism should be done away completely. This will go a long way in further improving our ease of doing business score. The Centre and state governments are yet to notify the requirements of TDS under the GST laws. The final countdown to the implementation date has already begun. At midnight on June 30, GST will be launched by the president in the august company of the PM, FM, state CMs and many Union and state ministers in the Central Hall of Parliament. Former PMs and FMs are also expected to join the launch. While the industry would have hoped for a much easier, simpler version of the GST to be implemented, it is still a good starting point for unlocking the true potential of the Indian economy. The Central Hall of Parliament has witnessed many historic moments since Independence; this one would be by large one of the most historic ones given its impact on the Indian economy. While there would be challenges in the short-term, the advantages in the mid- and long-term that the GST would yield certainly outweigh them. The trade and industry has only one option now: Get set, and go!
Writer: Rahul Renavikar- Managing director, Acuris Advisors Pvt Ltd (Views are personal)