Five reasons why GST is likely to miss its April 2016 deadline

Although the Congress is not opposed to the Bill, calling it ‘our Bill’, its support to the legislation is conditional

The Narendra Modi-led NDA government’s attempt to get the Constitution amended to roll out the Goods and Service Tax (GST) from April 1 next year looks unlikely to happen in the coming monsoon session of Parliament considering the changes the opposition, especially the Congress, wants in the amendment Bill.

Apart from this the recent the Lalit Modi controversy and the Vyapam scam in BJP-ruled Madhya Pradesh, could be a hurdle for the government and might upset the government’s legislative agenda.

Here are five reasons why GST is likely to miss its April 2016 deadline

  1. Though the Congress is not opposed to the GST Bill, calling it ‘our Bill’, its support to the legislation is conditional. It wants the one per cent tax on goods in inter-state trade (Section 18) to go. It also wants the aggregate rate of GST to be not more than 18 per cent, down from the current 26 per cent. A section of the Congress wants alcohol, petroleum, tobacco and electricity to be part of GST (some in the Congress believe that GST will prevent alcohol from being brewed illegally, preventing disasters like the one reported from Mumbai recently — how, it is not entirely clear). The party also wants the return of a consultative mechanism, excised from the earlier Bill. Unless these conditions are met, the Congress will not support the legislation. Without Congress’ support, it could be difficult to pass the Bill in the upper House
  2. The constitutional amendment Bill is only the first step. It has to be followed by an enabling legislation on which the two Houses have to agree. This is another stage which will need a lot of consultation
  3. The states have their own VAT (value added tax) legislations, to be repealed and replaced by legislation corresponding to the GST provisions. Before that, the states will have to take a view on interim provisions — what will happen between the state VAT being repealed and the new Bill coming into force; what will happen to the cases already filed according to old VAT-related laws; will there be a sunset period; what will prevail in the sunset period
  4. Few realise that passing laws in the states is not easy. All the laws, framed in English, have to be translated in to the local language before getting notified. This takes a long time
  5. Trade and industry will have to invest in IT to comply with the new regime. All stakeholders need to be educated on GST before it is rolled out

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