Union Finance Minister Arun Jaitley on Tuesday announced that the country will transition to the Goods and Services Taxes (GST) Bill on the midnight of June 30 to July 1. President Pranab Mukherjee will officially launch the Bill in Parliament’s Central Hall.
Mr. Jaitley said there was need to be prepared for challenges in the short term after the switchover. “I anticipate over the medium and long term, being a more efficient system prone to checking evasion, the revenues will grow and the spending capacity of governments at the Centre and the States will increase. And consequently, it shall have a positive impact on the GDP.”
Most of the States had cleared State GST laws, with the exception of Kerala and Jammu and Kashmir. “Kerala will consider it this week. Jammu and Kashmir is going through the process. They will have to do it separately as the State has different statutes,” Mr. Jaitley said at a press conference,
The Bill will be officially launched late in the evening on June 30. All Members of Parliament, Chief Ministers, State Finance Ministers, GST Council members and officials who helped, and all chairmen of the empowered committees on GST would be invited, said Mr. Jaitley.
Vice President Hamid Ansari, Prime Minister Narendra Modi would be present, while former Prime Ministers Manmohan Singha and H.D. Deve Gowda have been requested to attend. Lok Sabha Speaker Sumitra Mahajan would also be present.
Mr. Jaitley said it would be a one-hour function where Mr. Modi and Mr. Mukherjee would speak on the subject, after which two short films on GST would be screened.
“Not a very complicated process”
It was “not a very complicated process,” he said and urged industry members to prepare themselves for the GST.
“We have in July and August extended the date for filing the monthly returns. Now industry and trade have to prepare themselves. The process of registration is going on well and because it’s prone to checking evasion, in the long run, the number of assessees will also increase,” he said.
Of the approximately 80 lakh assessees in all taxes put together, 65 lakh had registered as of last week. “There are some duplicate cases because some were registered both for VAT and Excise – which will be eliminated,” Mr. Jaitley said.
“We have, for the last six months, been saying the rollout date is July 1. Nobody had any business not to be ready,” he said. Industry’s readiness would be determined by August 10, when the first returns would be filed. “That also, we have extended to September 15. So two-and-a-half months are there to be ready. And if he is still not ready, then I am afraid he doesn’t want to be ready,” he observed.
Revenue, inflation and compensation
On falling revenues, Mr. Jaitley said the rates would not fall due to an efficient system to reduce evasion. “The principle behind the tax rates suggests that revenue will be lower, but we believe that revenue won’t fall because an efficient system will reduce evasion. So the rates falling on some products will have some impact on inflation. As will the monsoon performance.”
He added, “Indicative prices is (sic) not the government’s job, but I seriously hope that even though transients (sic) there is an anti-profiteering clause, it should act as a deterrent and not really be used, unless we are compelled to use it.”
Impact on States keeping out of GST
Mr. Jaitley said he stronly believed that consumers and producers would suffer if States kept out of the GST. “They will not get input tax credit and consumers will get more expensive products than rest of the country. There will be another impact on the compensation to States. Those who don’t join don’t get that benefit of revenue loss compensation for 5 years,” he noted.
“I think that it [GST] is a reform step for the better. All reforms in their initial phase have an impact and are seen as disruptive,and in the long run are seen as result-yielding reforms. When you go for reforms, you should never blink. Because when you blink, you get derailed,” he added.