Striving For April Rollout

The indirect tax regime in India is witnessing a massive shift with the plan to revamp the current one with the Goods and Services Tax regime which would go a long way in achieving the vision of one nation, one tax.

The government has been making rapid strides towards various enablers for GST implementation from 1 April 2017, which now looks achievable. The fact that the GST Constitutional Amendment Bill (CAB) received the presidential assent on 8 September and the GST Council was constituted on 10 September is an indication of the urgency being shown by the central and state governments towards 1 April rollout.

The council has already conducted four meetings and the key takeaways from each are as follows:

First Meeting
Held on 22 and 23 September 2016, the agenda for the meeting included fixing of the threshold limit for taxable person, issue of dual control and draft compensation formula. The Council fixed a threshold limit of Rs 10 lakh for northeastern states and Rs 20 lakh for other states. It also decided that the Centre would compensate the states for any revenue loss under GST for five years with 2015-16 as the base year with an average annual growth rate of 14 per cent in tax revenues. As for dual control, it was recommended that assessments would be conducted by state authorities if the annual turnover is below Rs 1.5 crore and by central or state officers if it’s above Rs 1.5 crore. The said issue is under consideration.

Second Meeting
At its 30 September meeting, the Council meeting approved draft rules on Registration, Payment, Invoice, Refund and Return, issued by the Central Board of Excise and Customs, a few days earlier. The final rules would accordingly be notified in the public domain after the enactment of GST Act.

Third Meeting
The Council, at its 19-21 October meeting, was scheduled to finalise procedure for compensation to the states, exemption schemes and tax rates. However, the meeting concluded on 20 October, a day ahead of schedule, with no consensus being reached on its proposed agenda. It proposed the following for consideration in its next meeting: A four-slab rate structure proposed by the Centre, i.e., 6, 12, 18 and 26 per cent, along with a 4 per cent levy on gold; a lower tax slab of 6 per cent for those essential commodities on which no excise duty is levied at present by the Centre but a 5 per cent value-added tax is levied by the states; cess on Ultra-luxury (like high-end cars) and demerit goods (like tobacco).

Fourth Meeting
At its meeting on 3-4 November, the council approved tax slabs of 5, 12, 18 and 28 per cent including cess on ultra-luxury and demerit goods for five years, but left the issue of levy on gold for a later period. It also decided to exempt nearly half of the consumer inflation basket, including food grains, from GST. A constitutional guarantee to states for making good tax losses for a period of five years was also approved.

Further, the government recently issued FAQs on GST registration. The beta-portal for registration of existing assessees under GST has been active from 8 November.

The Central government intends to introduce the various GST legislations for passage in the Parliament in the upcoming winter session which is expected to start from 16 November. The rapid pace of developments so far clearly lay down a strong intent statement by both the Centre and the state governments towards an early implementation of GST.