The Union Budget has hinted that July 1, 2017, will be the rollout date for the goods and services tax (GST). In the midst of the elections in five states, the NDA government, however, did not go in for the much-expected increase in the service tax rate.
Union Finance Minister Arun Jaitley did not give a timeline on the new indirect tax regime. The excise duty notification for inputs used for fuel cell-based power systems, bio-gas, hydrogen and bio-methane, however, says the changes will not apply after June 30, 2017, hinting at a July roll-out of GST.
MS Mani, senior director, indirect tax, Deloitte Haskins & Sells LLP, said the absence of major changes in the excise and service tax confirms that the government was “definitively moving” to GST on July 1, 2017.
Jaitley said in the Lok Sabha: “I have preferred not to make many changes in the current regime of Excise & Service Tax because the same are to be replaced by GST soon.” Mani said businesses that had put GST preparation on the backburner would now need to undertake a crash course in getting GST-ready as its introduction is imminent.
Jaitley said the government would launch an outreach programme with industry from April 1, 2017. Labelling GST and demonetisation as “tectonic policy initiatives”, he said India was one of the very few economies undertaking transformational reforms. “There has been substantial progress towards ushering in GST, by far, the biggest tax reform since independence. Since the enactment of the Constitution (One Hundred and First Amendment) Act, 2016, the preparatory work for this path-breaking reform has been a top priority for the government,” he said.
Several teams of officers of both the states and the Central Board of Excise and Customs have been working to give finishing touches to the Model GST law and rules and other details.
The GST Council, headed by the Union finance minister and state ministers as its members, has so far held nine meetings to discuss issues including the broad contours of the GST rate structure, threshold exemption and parameters for the composition scheme, details for compensation to states. Jaitley said the council had finalised its recommendations on almost all the issues “based on consensus and after spirited debate and discussions”.
GST would subsume central and state levies like the excise duty, service tax and VAT. The proposed tax slabs so far are 5, 12, 18 and 28 per cent. The implementation of GST is likely to bring more taxes both to the Central and state governments because of the widening of the tax net.
The Budget, however, has estimated anine per cent increase in indirect tax collection at Rs.9,26,900 crore during 2017-18 over the revised estimate of Rs.8,51,869 crore in the current year.