While the Goods and Services Tax (GST) should “ideally” be implemented from the start of the financial year, it being a transactional tax can be imposed anytime during the year, finance minister Arun Jaitley said on Saturday, amid signs that the April 1, 2017 target date for the GST may be missed. Lack of consensus on issues of cross-empowerment among the Centre and states is holding up finalisation of the subordinate laws relating to the GST.
Unlike the income tax, which kicks in from the start of the financial year, the GST can be implemented anytime between April 1 and September 16, 2017, in accordance with the constitutional amendment legislation that allows a national sales tax by subsuming central and state levies, he said at the annual general meeting of industry chamber FICCI.
The GST Council has resolved 10 issues and only one pertaining to administration of tax is pending, he said. The GST Council’s next meeting is scheduled on December 22-23, with the Centre being unable to bring in subordinate legislation in the winter session of Parliament that ended Friday.
“It (GST) is a transactional tax and not an income tax. Transactional tax can start in any part of the financial year and therefore, the range of timing when it has to come into force because of constitutional necessity is April 1, 2017 to September 16, 2017. Hopefully, the earlier we do, the better it is for the new taxation system,” he said.
Jaitley alluded to “certain kinds of turf issues” that are yet to be resolved. “But, the constitutional embargo is very clear. The entire amendment was notified on September 16, 2016, and it permits the old taxation regime to continue for a period of one year.” he said.
“So, on September 16, 2017, as far as the current mode of taxation is concerned, the curtain will be down. Therefore, neither the Centre not the state can go in for collection.”
The Centre and state legislations are being drafted and there should not be any major difficulty in these being approved, he said. There are one or two issues with regard to cross-empowerment of Centre and states, which will be amicably solved.
“I don’t see any major difficulty for these legislations being finally approved,” he said. The only issue remaining “is a very small in the larger frame of things” and the tax administration is under discussion of the GST Council as three major and some minor taxes are being merged into one.
Jaitley suggested there is a need that each assessee is assessed only once since central taxes like excise and service tax and state levies like value-added tax are being subsumed into one. “You have the pre-existing (tax) machinery of the Centre and states. (It has to be decided) how the burden of this assessment is going to be shared between the Centre and states and how we cross-empower both the Centre and states,” he said.
He said that both the Centre and states should figure out sharing of the tax assessment. With the discussion on model laws and dual control still pending, the GST legislation — CGST, IGST and compensation law — are yet to be finalised. Based on this model law, the Central GST and State GST laws will be formed.
The discussion on the IGST law is likely to happen in the next meeting of the Council along with that of deciding on the jurisdiction over assessees.