In its first meeting after the passage of Constitution Amendment Bill for Goods and Services Tax (GST) in Parliament, the Empowered Committee of State Finance Ministers will meet representatives from trade and industry on August 30.
The meeting is an effort to reach out to industry, which will play a pivotal role in the rollout of the proposed GST, and understand their concerns about the indirect tax regime, government officials said.
“They want to convey their level of preparedness and also clarify doubts regarding several stages of taxation and exemptions,” a government official said, adding that interactions with industry bodies need to be carried out simultaneously with the ongoing legislative process in various states.
Representatives of industry bodies such as CII, Ficci and Assocham will participate in the meeting. Even though the proposed GST is being seen as a positive for industries such as logistics, automobiles and consumer durable, industry and tax experts have raised apprehensions regarding input tax credit for Integrated GST (IGST), expected pruning of exemptions, increase in compliance costs and lack of trained staff with the transition time expected to be between 9-12 months. Businesses such as IT, supply chain, sales and marketing need to adapt themselves within the next seven months for the new tax regime if it gets implemented by the intended deadline of April 1, 2017.
The officials said that though the final decisions will be taken after formation of the GST Council, such meetings will help in understanding the difficulties that the industry players, especially smaller ones, may face after the rollout of GST.
The central government’s preparations are in full swing for the implementation of the indirect tax regime by the intended deadline of April 1, 2017. The Central Board of Excise and Customs under the Ministry of Finance is already conducting training of its officials to familiarise them with the IT system, expected to be completed in four phases during December 2016-March 2017. Also, the government is ready with the IT backbone for the tax regime, called GST Network (GSTN), which will connect the database of states and Centre and taxpayers. The government expects to finalise the hardware and software of the network for testing by January 2017.
The Constitution (122nd Amendment) Bill, after its ratification by Lok Sabha last week, has been sent to states. At least 16 out of 29 state assemblies need to pass the Bill with a simple majority. Revenue Secretary Hasmukh Adhia during a media briefing last week had said the government expects to complete this process within the next 30 days and that the government is looking at April 1, 2017 as the target date for implementation of the indirect tax regime.
On Friday, BJP-ruled Assam became the first state to ratify the Constitution Amendment Bill. The ratification process by states is expected to be a smooth process for the Centre with 13 states being ruled by BJP. After the ratification by states, the Bill will be sent to the President for his assent, following which a GST Council with representatives from the Centre and states will be formed within 60 days of the enactment of the Bill. The Council will be entrusted with recommending tax rates, including the band of rates for goods and services. The Council will also decide on the draft GST law and Place of Supply rules and the exemptions, threshold limits, dual administration between the states and the Centre as well as on the reports of the Joint Committee constituted by the Empowered Committee of the State Finance Ministers on payment process, registration, refund process and return under GST, which are in public domain for suggestions. The finance ministry will finalise the Central GST and Integrated GST Bills, which would then be approved by the Union Cabinet and then are likely to be sent to Parliament for its approval in the Winter Session.
Matter at hand
* Representatives of industry bodies such as CII, Ficci and Assocham will participate in the meeting, which is scheduled for August 30
* Apprehensions regarding input tax credit for Integrated GST, expected pruning of exemptions, increase in compliance costs and lack of trained staff have been raised
* Officials said such meetings will help in understanding the difficulties that the industry players, especially smaller ones, may face after the rollout of GST