1st APRIL 2016 - NOT A REALISTIC DATE OF INTRODUCTION OF GST
The concept of “Goods and Service Tax in India” was first introduced by Mr. P. Chidambaram in his Budget speech of 2006 and at that time the date of introduction of GST was declared as 1sr. April 2010 but this date was postponed from year to year for one or another reason. Now the present government has shown very serious concern on GST and declared a new date of introduction of GST. Let us see how realistic is this date and why I am saying that it is not practically possible to introduce GST on 1st April 2016.
The constitutional amendment to give right to central Government to tax the sale of Goods and state to tax services is the prerequisite for introduction of GST because at present Central Government has the right to tax the Goods up to manufacturing state and further states have no right to tax services. This constitutional amendment will require to be passed by both the houses of parliament by majority of at least half of the members of total strength of each house and by at least two third number of members present for voting. Further this constitutional amendment has to be ratified by at least half of the state assemblies. This ratification by states is required before sending the constitutional amendment for the assent of the president of India.
At present the Government has got the GST constitutional amendment Bill cleared from the lower house (Lok Sabha) only where the Ruling party and its partners have comfortable majority. The Bill has to be cleared from upper house (Rajya Sabha) and then from at 50% of the states and that will not be an easy task and also it will take its own time.
One more thing the GST constitutional amendment can be carried on by ratification of 50% of the states and if it is cleared only by 50% or say 60% of the sates but rejected by others then it will be perfect for the GST constitutional amendment but how the centre will take the dissenting states in GST net for actual introduction of the GST will be a big question because GST has to be introduced in throughout nation simultaneously unlike VAT which was introduced first by some states and followed by others in next year or years.
After this constitutional amendment the central and the states have to prepare respective GST Acts, Rules and forms and still they have not released any draft for the same and this is the indication that the process of forming these essentials of GST have not been started yet and this process will also take its own time.
Since inception of concept of GST in 2006 it has turned into a “struggle of right to tax” between States and Centre and States have always their own issues and apprehensions on GST and still there are some vital issues which are not finally settled between States and the Centre. The rate of tax (combined rate 26 or 27% is too high), keeping in or out petroleum products and liquor from the GST, covering the entry tax under GST or not and Number years of compensation to States on revenue losses from GST are still unresolved issues between the Centre and the States and certainly GST finally can only be introduced in India after final resolution of these issues. These issues are under discussion since 2006 and will also take more time and hence one year is not sufficient to resolve all these issues.
The declared date 1st April 2016 is very near and only one year and two months are left in it hence this is not a realistic date. We should take 1st April 2017 as the practically probable date for introduction of GST in India.
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BY CA SUDHIR HALAKHANDI
sudhirhalakhandi@gmail.com
CAclubindia
