Gst will now move with Tortoise

Finally the Finance Minister Mr. Pranab Mukherjee speaks about the future of the Goods and Service Tax and the words spoken by him were not surprising at all.

GST is unlikely to be implemented from the scheduled date of April 1, 2011. Now he is looking forward to roll out the Goods and Services tax simultaneously with the Direct Taxes Code (DTC) from April 1, 2012. The main reason for this is the Constitution Amendment Bill which was not tabled in the Monsoon session due to lack of consensus among the States and the Centre. Despite of the best efforts taken by the Mr. Pranab Mukherjee, he failed to table the much awaited Indirect Tax reforms Bill, for introducing the Goods and Services Tax, in the monsoon session of Parliament. GST legislation can be undertaken only after the Constitutional Amendment but a strong opposition from the BJP ruled states puts a hold on its roll out in the Monsoon Session.

The original plan of the Finance Ministry for the Goods and Service Tax was to bring the Constitution Amendment Bill in the monsoon session of the Parliament and from there it would have been referred to the standing committee. After all the comments from the parliamentary panel, the bill could have been placed in the winter session. If it passed in that session, GST legislation could have been tabled in the Budget Session. This plan becomes the thing of the past and now our Government is looking forward for a new plan that might help in the successful rolling out of the Goods and Services Tax.

Earlier our Finance Ministry said that “Having already compromised a lot to accommodate the concerns of the States, the Centre is unlikely to propose a fresh set of Constitutional Amendment to facilitate the Goods and Services Tax.” But now our Finance Minister said that in order to to accommodate the concerns of the state governments, the Centre is willing to consider a phased approach to the introduction of GST and are also willing to accept a dual rate structure that could eventually lead to a model GST regime. In the phased approach, the main focus is on allowing the Centre and the States to share their tax base and for this only initial amendments will be made to the Constitution. However, the two main pillars of the Goods and the Services Tax i.e. GST Council and the Dispute Settlement Authority will be kept outside the Constitution to start with and if required, both could be given a Green signal with Constitutional Amendment at a later stage.

However, Mr. Mukherjee still believes that the ideal structure for GST would be to adopt a single rate, common for goods and services and he also makes clear that Consensus is must for the implementation of the Goods and Services Tax. He also said that the Centre would continue to take into account the concerns of the States and work towards in developing a common ground for the implementation of the Goods and the Services Tax.

Unless and Until no Consensus is build on the Draft of the Constitution Amendment Bill, all other works regarding Goods and Service Tax are of no use. So for the time being the main focus of the Finance Ministry will be on the sorting out of the differences between the Centre and the States on the Draft so that a consensus is formed that will help in the smooth implementation of the Goods and services Tax.

Unless and until no consensus is build on the Draft of the Constitution Amendment Bill, all other works regarding Goods and Service Tax are of no use. So for the time being the main focus of the Finance Ministry will be on the sorting out of the differences between the Centre and the States on the Draft so that a consensus is formed that will help in the smooth implementation of the Goods and services Tax.