Our Finance Minister, Mr. Arun Jaitley, in his Budget Speech, did not elaborately discuss the road map of GST. However, he did indicate that the passage of the Constitutional amendment bill for GST and progress of its implementation is a “Tectonic Policy Initiative”.
While briefing the house on the benefits of GST, he said, “the advantages of GST for our economy in terms of spurring growth, competitiveness, indirect tax simplification and greater transparency have already been extensively discussed in both houses of Parliament. I thank all members of both the Houses for having passed the Constitution Amendment unanimously”. He also thanked the State Governments for resolving all relevant issues in the GST Council. This is a clear indication from the Finance Minister that major hurdles to GST implantation are cleared from the GST Council.
The FM said that the GST Council held 9 meetings to discuss various issues relating to GST, including broad contours of the GST rate structure, threshold exemption and parameters for composition scheme, details for compensation to States due to implementation of GST, examination of draft model GST law, draft IGST law and the Compensation Law and administrative mechanism for GST. Further he said that the GST Council has finalised its recommendations on almost all the issues based on consensus.
Regarding readiness of the new law, our FM said that several teams of officers both from the States and Central Board of Excise and Customs have been working tirelessly to give finishing touches to the model GST law and rules and other details. He Indicated that extensive reach-out efforts to trade and industry for GST will start from 1st April, 2017 to make them aware of the new taxation system. He also confirmed that GSTN’s (IT arm of GST) preparation of IT systems for GST is also on schedule.
Regarding the date of implementation, the Minister said, the Centre, through the Central Board of Excise & Customs, shall continue to strive to achieve the goal of implementation of GST as per schedule. Even though the Honourable minister did not spell out the date of implementation, the Revenue Secretary to the Ministry of Finance, Government India, Mr.Hasmukh Adhia did confirm to a private news channel that GST will be implemented on July 1st 2017. He also informed that the Govt. has pegged indirect tax growth of 8.8% while calculating the revenue for the fiscal year 2017-18.
The highlight of the Finance Minister’s speech is that he has pegged the fiscal deficit for 2017-18 at 3.2% of GDP and remains committed to achieve 3% in the following year. With this gradual approach, he ensured adherence to fiscal consolidation as recommended by FRBM report on fiscal consolidation road map. If this road map needs to be achieved, then achieving the targeted revenue is inevitable, and achieving the fiscal target revenue may be possible only by implementing GST (to achieve the targeted Indirect Tax Revenue based on GST) at earliest. We are presuming that the Government is zealous about maintaining the Fiscal discipline and implementing GST on time.
Further one can also predict that Indirect Tax revenue growth of 8.8% in the first year of implementation is not easy for the Government to achieve, that too within 9 months. We are presuming here that the Government will not only implement GST on time, but with vigour, and expect high compliance from businesses.
With all this, there are enough and more indications from the Government that it is keen to implement GST from 1st of July 2017. Mr. Jaitley’ s statement in the Budget Speech that he does not prefer to make many changes in the current regime of Excise & Service Tax because the same are to be replaced by GST soon is like the icing on cake.
Therefore, it is time for businesses to gear up for GST readiness since GST transformation is not an overnight affair.