The government is confident of rolling out the GST regime from April 1 next year but the deadline may be difficult to meet if resolution of issues like the rate of tax and items to be exempted take longer, Revenue Secretary Hasmukh Adhia said.
The GST Council, comprising of Union Finance Minister and representative of all 29 states, will decide on the central and state taxes that are to be subsumed in the national sales tax (GST) as well as the cesses, he told PTI in an interview.
Adhia said the GST Council shall make recommendation to the Centre and states on the cesses and surcharges levied by the Union, states and local bodies which may be subsumed in the Goods and Services Tax (GST).
"Which all cesses will merge will depend upon the decision of the GST Council. If all cesses are merged in the GST, the requirements of revenue for Union Government would have to be assessed higher, because the income coming to Union from GST instead of cess will now have to be devolved at the rate of 42 per cent to the states," he said.
While the taxes to be subsumed under GST are to be decided by the Council, he said the taxes which will not have separate identity include excise duty, VAT, service tax, additional excise duty, CVD, special additional duty of customs, entertainment tax, luxury tax, Octroi, entry tax, purchase tax, taxes on lottery, betting and gambling, among others.
"As of now we are optimistic of achieving the target of April 1, 2017. We have already made a plan for training of 60,000 officials, which has already started. 5,000 officers are already trained. The IT backbone will be ready for testing by January, 2017," he said.
Stating that the government will do its best to achieve the target date of rollout, Adhia said the only concern remains resolution of issues by the GST Council.
"If the resolution of various issues in the GST Council takes more time than expected, then there would be difficulty in achieving the target," he said.
In case the deadline is missed, it is theoretically possible to roll out GST from the middle of the year but the trade and industry will need to be consulted as some of the big companies have to change their software to accommodate the new taxation regime, he added.
On the GST rate being talked about in the range of 18-20 per cent, he said, "The rate and rate structure can only be based on facts and figures on the existing revenue of states and Centre which are to be discussed in the GST Council.
"At the moment it is not possible to say yes or no to any such artificial number. The decision on rates will also depend on list of exempt items, list of demerit commodities, among others."
'Serious Differences'Former Union Finance Minister P Chidambaram has said there are "serious differences" between the Union Government and state Finance Ministers on finalisation of the GST tax structure and that he did not think they were anywhere near an agreement on what the standard rate should be.
"As far as I can see there are serious differences between the economics division and revenue department and also there are serious differences between the Union Government and state Finance Ministers. I don't think they are anywhere near any agreement about what the standard rate should be," he said on Sunday.
He was speaking at a panel discussion on former RBI Governor D Subbarao's book "Who Moved My Interest Rate", organised by the Indian Institute of Management - Bangalore.
Chidambaram said there is a lot of work to be done to finalise the GST tax structure. "If you don't reach agreement on the standard rate, they cannot fix the band rates. So there is a lot of work to be done," he added.
He said the success and failure of the transformation of legislation would depend upon how the central government fixes the standard rate of GST.
Speaking to reporters before the panel discussion, Subbarao said it is difficult and premature to speculate on what would happen on this front, but expressed confidence that the tax bureaucracy, both at the Centre and state, have the capacity to implement GST.
"It is difficult and premature to speculate on what will happen, but one thing I want to say is that I have complete confidence that our tax bureaucracy, both the states and the Centre, has the capacity to implement GST," he said.
"I have worked with state and central government departments and I know for sure that our tax bureaucracy is among the best to implement GST," he added.
Subbarao said there are a number of steps to be concluded before GST becomes operational in reality.
"Some of them have to do with determining of GST. Some of them have to do with potential political differences. And some of them have to do with capacity to implement," Subbarao said.
