At the stroke of midnight of June 30-July 1, India will awake to 'one country, one tax' regime. The biggest tax reform after Independence, the Goods and Services Tax (GST), will be rolled out from the Central Hall of Parliament by President Pranab Mukherjee from the same podium where India's first Prime Minister Jawaharlal Nehru gave his historic "tryst with destiny" speech to declare India's independence at the midnight of August 14-15, 1947.
In an apparent attempt to recreate the midnight of August 14-15, 1947, the government has proposed to hold the special session of both Houses from 11pm on June 30 till 12.10 am on July 1. A gong will be sounded at midnight to declare the arrival of the new single indirect tax replacing a plethora of central and state taxes from July 1. It will be typical of one sounded after Nehru then invoked that "at the stroke of midnight hour, when the world sleeps, India will awake to life and freedom."
President Mukherjee, who had piloted the first Constitutional Amendment Bill in 2011 to usher in GST as then FM of the UPA government, will supervise the function. He will be flanked by Vice-President Hamid Ansari, Prime Minister Narendra Modi, and former prime ministers – Dr Manmohan Singh and Devi Gowda.
Finance Minister Arun Jaitley announced that the special event in the Central Hall of Parliament will put to rest all speculation of further postponement of the GST regime.
The event has been curated in such a way that PM Modi shares the dais with the President unlike all other Central Hall gatherings where only the Lok Sabha Speaker and the Rajya Sabha Chairman flank the President on the dais.
Jaitley's announcement came as a big surprise since the Central Hall has been closed for the past two weeks to renovate it completely for the big event of the swearing-in of the new President of India on July 25. The workers will have to renovate the Hall now at the breakneck speed in 10 days to ensure everything is in place. There were murmurs in the Parliament bureaucracy, who are planning to approach Speaker Sumitra Mahajan to suggest that the GST function should be shifted to the auditorium in Parliament House Library Building. But since the government is out to recreate the "freedom at midnight hour", the Speaker may not agree. Jaitley said he thought of the grand hour-long function in the Central Hall to mirror the contributions made by different parties and the states in bringing the new revolutionary tax regime. The Central Hall had previously hosted a function to mark 50 years of Independence.
All Lok Sabha and Rajya Sabha Members of Parliament have been invited as also chief ministers and state finance ministers, Jaitley said, adding that all the members – past and present -- chairmen of the GST Council groups and the Empowered Committee of State Finance Ministers have been invited. Jaitley is himself chairman of the GST Council. Admitting "some challenges" in the short run in the switch over to the GST, Jaitley said it being a more efficient system will result in better compliance and as such lead to rise in the revenue of both the Centre and the states in medium and long terms since the size of the formal economy is bound to grow.
On the trading community's apprehensions over the anti-profiteering clause in the GST law, Jaitley said the provision has been made only as a deterrent and not for enforcement. He, however, warned that it won't be used unless the government is forced to invoke it.
"Nobody has any business not to be ready" for the new tax regime when the roll-out date of July 1 had been announced well in advance, he said when told about the industry and business bodies talking in terms of the small and medium enterprises not yet prepared for the switchover. Referring to relaxation of two months for filing the first GST returns announced only two days ago, he said additional time has been given in the initial period and so everyone has enough time to prepare for the transition.
On giving small businesses more time, Jaitley said they had been given enough time to prepare for the July 1 roll-out. With 6.5 million firms already registered for GST and more expected to sign up, there was no excuse for firms not to be ready for what has been billed as the biggest tax reform in India's 70-year history. Jaitley said he anticipated, over the medium and the long term, that improved tax collection under the GST would cause revenues to grow, and the spending capacity of India's federal and regional governments would increase. "Consequently, it should have a positive impact on the GDP," said Jaitley. "The size of the formal economy should also increase."
The roll-out plan
GST will unify over a dozen central and state levies into one and all those currently paying such taxes need to migrate to the new system.
Every business carrying out a taxable supply of goods or services with turnover exceeding the threshold limit of Rs 20 lakh will be required to register.
GST registration will allow for seamless input tax credit.
As many as 65 lakh out of the 80 lakh taxpayers have already migrated from various platforms to GST.
A person with multiple business verticals in a state may obtain a separate registration for each business vertical.
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