The government is not thinking of extending the roll-out date of the Goods and Services Tax (GST) beyond July 1, and businesses and traders must ensure preparedness by then, the Finance Ministry said on Thursday.
The government is not thinking of extending the roll-out date of the Goods and Services Tax (GST) beyond July 1, and businesses and traders must ensure preparedness by then, the Finance Ministry said on Thursday. “So far as state of preparedness goes, both Centre and state governments are ready to implement GST on July 1. At the moment there is no ground to think or for discussion on extension of date beyond July 1,” Economic Affairs Secretary Shaktikanta Das told BTVi here in an interview.
On the industry asking for more time for preparedness, Revenue Secretary Hasmukh Adhia said that businesses must step up to ensure readiness by July 1 as the roll-out date has already been postponed from the earlier targeted April 1. “We are saying from the first day, that we will be ready by April 1. That time also businesses said they were not ready. It is sounding strange. They should go the extra mile to be ready by July 1. Our goal is July 1,” Adhia told BTVi in an interview.
“It (fitment of goods) will take some time but businesses need not wait and they need to get ready by changing their Enterprise Resource Planning (ERP) systems, IT systems. Even the small businesses need to hook onto some kind of accounting software. There are 34 GST Suvidha providers who have got their own accounting software. There is one free software which will be on GSTN portal,” he said.
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He said that the businesses need not be worried on the fitment of commodities in the tax slabs as these will be fitted in the nearest tax slab to their current incidence of taxation.
“I don’t think businesses need to be worried as the fitment formula is already known. Take the present incidence of taxation and we will try to fit it in the nearest available slab. For very few commodities, the Council may make some changes. But more or less it is a mechanical exercise,” he said.
“Rate is not crucial for preparedness of GST. Indirect taxes can be changed anytime and businesses are used to it. Even at midnight, indirect tax rates have been changed earlier. So there is no hurry in taking decision on rates,” he said.
Allaying fears on GST increasing the cost of services, Adhia said that the main component of transport – petrol and diesel – is zero-rated under GST and for most of the other services, rate of tax will be less than 18 per cent.
Petroleum products though included in the GST net have been kept zero-rated for now as states were not comfortable giving up their large share of revenue that comes from these. The states will wait and see the tax buoyancy, and decide accordingly after the first year of GST implementation.
“Rate of tax will be much less than 18 per cent. Not all services will be at 18 per cent. For services which may move from 15 per cent to 18 per cent tax rate, will be able to claim input tax credit,” he said.
Talking about revenues in the new indirect tax regime, Adhia said the government has kept very conservative targets because it will be a new system.
“For next year, we are very conservative for our target of indirect tax collection because it is a new system. But looking at the self compliance nature of GST, there would be widening of the tax net. If not in the first year, because of the implementation glitches, I see a lot of buoyancy in the second year,” he said.
Das said the overall impact of GST, coupled with demonetisation and the Jan Dhan-Aadhaar-mobile (JAM), on the economy is going to be “hugely positive”.
All three together will impact job creation and growth positively, he said.