Prime Minister Narendra Modi has given directions for Goods and Services Tax to be rolled out by April 2016.
Modi met finance minister Arun Jaitley on Monday to judge how far the GST preparations have moved. According to Jaitley, the Constitutional Amendment Bill to give states and the Centre co-equal power to tax services and production can be introduced in Parliament in the Winter Session. This is the first structured meeting on the tax measure that has been held by Modi.
The big challenge in the run up to GST is setting up of a national IT framework that can act as a clearing house for the taxation of inter-state movement of goods. Finance ministry officials have told Modi that the IT framework would be up and running by 2016.
The ministry has already set up a GST cell headed by a joint secretary-level officer. This cell, which also has officers from the Central Board of Excise and Customs, will be the secretariat for the empowered committee of state finance ministers and pilot the key bills through Parliament and monitor their subsequent progress through state legislatures. The setting up of the cell shows the ministry has now begun to rush the timetable for GST roll out.
Modi is, however, reported to have advised the finance ministry to ensure that all the elements are in place, before making the announcement for a nationwide roll-out of the tax. GST will replace all domestic taxes on production and sale of goods and services.
While the finance ministry is in favour of a single rate of tax in the bill, it has conceded to the demand by the states for a band within which their levies would flourish.
The Confederation of All India Traders that has most retailers under its umbrella has argued for a single rate.
On the other hand, representatives of major industrial houses have stepped up their lobbying with the Centre to make the tax come true. But irrespective of the choice of the rates the roll out of GST will be the single most economic reform in the country.