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India not ready for GST rollout from 1 July: West Bengal FM Amit Mitra

West Bengal finance minister Amit Mitra, who skipped the GST Council meeting in Srinagar, says rules and forms are not complete for a 1 July GST rollout

West Bengal FM Amit Mitra’s contentions on 1 July GST rollout comes days ahead of the GST Council meeting in New Delhi on Saturday. Photo: Indranil Bhowmik/MintPremium
West Bengal FM Amit Mitra’s contentions on 1 July GST rollout comes days ahead of the GST Council meeting in New Delhi on Saturday. Photo: Indranil Bhowmik/Mint

Kolkata/Bengaluru/Chennai: West Bengal finance minister Amit Mitra on Tuesday demanded that the proposed rollout of the goods and service tax (GST) from 1 July be deferred, claiming that preparations for the indirect tax reform were still not complete.

Mitra’s demand comes days ahead of the crucial 15th meeting of the powerful federal indirect tax body, the GST Council, in New Delhi on Saturday to give finishing touches to the new tax framework and amid hectic lobbying by businesses for tax rate concessions.

“GST is not fully prepared and ready. Rules and forms not completed and 1 July must not be finalized for rollout of GST," said Mitra.

Twenty one states and Puducherry, a Union territory with a legislature, have so far passed state GST Acts, but West Bengal is yet to table a bill in the state Assembly.

Partha Chatterjee, the state’s minister for parliamentary affairs, said West Bengal will decide on moving the bill after the issues raised by Mitra over proposed taxes are dealt within the GST Council.

The Council had earlier urged all states to complete the legislative work by the end of May.

An official of the Council told Mint on condition of anonymity that neither the federal tax body nor the central government had ever discussed taking a re-look at the GST implementation date of 1 July.

“We are working towards meeting the deadline. All that is left to be done are some issues relating to fitment of certain items into different tax slabs and resolving certain concerns raised by the trade and industry," the official said.

Dismissing Mitra’s statements as political posturing, a state finance minister said, “When we met at the GST Council, no state finance minister echoed what Mitra has said on Tuesday. I think it is more of a political statement and not really coming from administrative concerns. All states are ready to follow the July deadline."

Revenue secretary Hasmukh Adhia, who was in Bengaluru for an industry interaction, declined to comment on Mitra’s statement. However, an official statement from the finance ministry quoted Adhia as “categorically" saying during the meeting that GST will be implemented from 1 July.

Mitra, who had skipped the 13th GST Council meeting in Srinagar, said he will continue to fight in the Council for reduction in rates and exemption of certain items such as footwear priced at less than Rs500, cashew nuts, films and single-screen theatres. The Council is set to finalize tax rates on a few commodities such as biscuits, footwear, jewellery and beedis at the 3 June meeting.

Separately, lobbying for lower tax rates has peaked from hoteliers and a few manufacturing sectors. Thousands of hotels, including self-service breakfast and lunch counters across the five southern states, remained shut on Tuesday. Manufacturers of low-cost glucose biscuits, fly ash brick makers, telecom service providers and movie exhibitors are seeking lower tax rates.

“Despite numerous representations and memorandums to the authorities, the government has proposed a levy of between 5-18 % on the different categories of restaurants and the highest rate applicable for our industry—a steep levy of 28% GST on hotels with room tariff above Rs5,000," said a statement by the Tamil Nadu Hotels and Restaurant Association.

Already reeling under the impact of rising input costs and the recent liquor ban along highways, small and medium hotels say the high tax rate would reduce footfalls and further erode their profitability.

According to a hotels industry association, nearly 500,000 hotels were closed, with estimated losses of Rs500 crore in the south.

“Small hotels will have to transfer the additional cost to customers who have already reduced the frequency of eating out over high costs," said Chandrashekar Hebbar, president of the Bruhat Bangalore Hotels Association.

Nidheesh.M.K in Bengaluru and Yunus Lasania in Hyderabad contributed to this story.

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Updated: 31 May 2017, 12:00 AM IST
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