GST being a transformational change, business will require sufficient time to prepare and hence some of the issues should be resolved at the earliest
As another meeting of the goods and services tax (GST) Council - its 11th thus far – gets underway on March 4 and 5, it would be a good idea to take stock of what has happened and more importantly what needs to happen in order to meet the timeline of July 1.
There has undoubtedly been significant progress on GST since the first meeting of the GC on September 23-24 last year. In the initial four meetings held between late September and early November in 2016, the threshold requirements, draft rules on registration, returns, payments and refunds, rate buckets, etc, were approved.
However, the subsequent four meetings held between December 2 and January 4 remained largely inconclusive. The meetings on January 16 and February 18 were able to achieve consensus on the difficult issues of dual control and compensation principles.
Keeping in mind the progress made so far, it would be fair to expect that the meeting scheduled for March 4-5 is able to conclude on certain critical issues considering the fact that the timeline of July 1, announced by the GC in its meeting on January 16 and reiterated during the Budget presentation by the finance minister, is just three months away. GST being a transformational change, business will require sufficient time to prepare and hence some of the issues mentioned below should be resolved at the earliest.
The central GST (CGST) and the integrated (IGST) legislation need to now acquire final form, and the final legislation after approval by the GC needs to be put in public domain so that all stakeholders are aware of the same. We need to keep in mind that these legislations, after their approval by the GC, need to be approved by Parliament (for CGST and IGST) and the State Legislatures (for SGST) before they acquire the force of law. However, the draft legislation as approved by the GC could be a good starting point for preparation.
The final rates applicable to various goods and services also need to be announced as without knowledge of the rates applicable to specific products and services it is not possible for the businesses to rework their pricing and distribution policies.
The finance minister, in the Budget speech, had mentioned a GST outreach programme for small and medium-sized businesses (SMEs) for which details are awaited. SMEs are going to be significantly impacted by GST as they will need to adopt a new process and acquire IT capabilities and hence the need for an early launch of the GST outreach initiative.
Since GST is going to be extensively IT-driven, ensuring that the IT platform is able to handle the multitude of transactions that it would be required to process on a regular basis is of paramount importance. It would be expected that the government provides an update on the status of IT preparedness and detail the alleviation mechanisms that taxpayers can resort to when they face difficulties in making payments or filing returns, refunds, etc.
These are some of the critical issues that need to be resolved so that business can migrate to GST in a painless and efficient manner. The success of the largest-ever tax reform undertaken in our country would depend on how well prepared we are and clarity on the above issues would go a long way in ensuring adequate and timely preparations by all stakeholders.
The writer is a senior director with Deloitte Haskins & Sells LLP
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