With the clock ticking on the planned roll-out of the Goods and Services Tax on July 1, the government and the GST Council have been furiously at work. At its meeting on Sunday, the Council eased the norms for filing detailed transaction wise returns in the initial months of July and August — by pushing that requirement to September and settling for a simple return in the interim besides setting the rates on lotteries of state governments at 12 per cent of face value and 28 per cent for those authorised by states but run by private entities. The Council has also revised the levy for restaurants inside five-star hotels to 18 per cent, from the earlier slab of 28 per cent and the operational framework and rules for an anti-profiteering authority which will arbitrate on whether a company needs to reduce prices if its products gain from lower GST rates. That would mean reimbursing money to consumers or depositing it in a separate fund if it is established that a firm has indulged in profiteering.
A few more issues need to be ironed out, such as rules for e-waybills. But for now, the government appears determined to go ahead with what many term as the country’s most ambitious indirect tax reform. Doubts have been raised on the level of preparedness for the new taxation regime at various levels — trade, industry, state governments and the IT network. India’s bigger corporates may be better positioned or equipped to handle this but the ones struggling are small and medium firms for whom the migration to a new regime will lead to a huge burden. Finance Minister Arun Jaitley has, however, said that over 81 per cent of the taxpayers liable for GST have already registered with the Goods and Services Tax Network or GSTN while making the point that the government was mindful of some of the problems having given industry the leeway of 42 days before filing returns.
Jaitley has said that the country doesn’t have the luxury of time to defer the implementation of the GST yet again. He may be right about that. India’s first date for a GST roll-out was eight years ago, on April 1, 2009, during the UPA regime when Pranab Mukherjee was finance minister. One can fault the homegrown model for building a common national market for goods and services because of multiple and high rates — a far cry from the simple design originally envisaged. But as India meets its tryst with destiny on the midnight of June 30, in keeping with the government’s grand roll-out plan, it is important that many of the distortions are corrected down the line, once the new system stabilises and with as little disruption to economic activity as possible. The stakes are high, coming as it does quickly after demonetisation.