Consensus at GST Council under test as roll-out date nears3 min read . Updated: 03 Jun 2017, 01:16 AM IST
Some state finance ministers have pushed for lower taxes on products and services key to their economies and many industry lobby groups are demanding concessions under GST
New Delhi: With just 28 days left for enforcing India’s biggest tax reform since independence, consensus at the Goods and Services Tax Council (GST Council) is coming under stress as calls for delaying its implementation become louder.
Some state finance ministers have pushed for lower taxes on products and services that are key to their economies and many industry lobby groups are demanding concessions.
Low-cost biscuit makers, hoteliers, fly ash brick producers and telecom service providers are among those seeking lower taxes.
Given the unfinished work on the logistics of rolling out the tax regime which is entirely dependent on an efficient information technology (IT) network, questions are being raised whether the 1 July deadline will be met.
The GST Council is empowered to decide on the tax rate on every commodity and service supplied in the country solely with the concurrence of both the union and state governments.
West Bengal chief minister Mamata Banerjee on Friday said GST in its current form is “not acceptable" and that she will write to finance minister Arun Jaitley explaining why she is unhappy with the new tax regime.
West Bengal’s finance minister Amit Mitra will attend Saturday’s GST Council meeting, where he will seek a reduction in proposed tax rates on several items such as footwear priced below Rs500, single-screen movie exhibitors and cashew nuts.
GST will add to the people’s woes in the aftermath of the demonetization exercise that slowed economic growth to 6.1% in the quarter ended March, Banerjee said. It was the fourth consecutive quarter of slower growth.
West Bengal has not yet passed the GST bill in the state assembly. Partha Chatterjee, the state’s minister for parliamentary affairs, said earlier in the week that the West Bengal government will decide on moving the bill only after seeing how the state’s misgivings about GST are addressed.
Mitra, the finance minister, said that in the GST Council of 33 members, he had a “single vote". Still, he would continue to fight within the panel for reduction of tax rates, he said.
In the GST Council, decisions are to be taken with a 75% majority, for which support of the states and the centre is essential, as the centre carries only a weight of one-third (33.3%) of the total votes and all states taken together account for two-thirds (66.6%).
This is meant to ensure that any decision on tax rates, timing of bringing petroleum products into GST and the date of rollout is done with the concurrence of both the centre and states.
The 15th meeting of the Council in the capital on Saturday is set to consider tax rates on a few items such as beedis, footwear, gems and jewellery and lottery services, in addition to anti-profiteering measures and rules on transition provisions and returns.
“We are working towards meeting the 1 July deadline. We need to finalize the tax rates on a few items. Field officials are being trained and we are holding programmes to educate businesses," an official privy to the progress in the preparations said on condition of anonymity.
Another official, who also spoke on condition anonymity, admitted that there will be teething problems when such a massive project is implemented. The Council is set to meet again in June to review the preparedness.
Finance minister Arun Jaitley on Thursday reiterated the central government’s intention to stick to the deadline.
The biggest challenge in the implementation is to get small traders in the villages on board. The problems they face include the cost of having a computer and the manpower needed for monthly uploading of GST returns. Traders with revenue above ₹ 0 lakh have to register for GST. Those with less than ₹ 50 lakh in revenue can avail of a composition scheme with fewer compliance requirements.
Archit Gupta, founder and chief executive officer of ClearTax.com, an e-filing tax portal, said that while large companies have begun to prepare for GST, it is the small and medium enterprises that are unprepared.