In GST launch, Finance Ministry sees further delay
January, 10th 2011
With the Opposition adamant on a joint parliamentary committee probe into 2G spectrum allocation, the government may be forced to further delay rollout of the goods & services tax by a year. The finance ministry expects little cooperation on GST from states ruled by the main opposition party, the BJP, and its allies.
Finance ministry officials involved in GST rollout preparations, confirmed to Business Standard that the proposed indirect-tax regime cannot come into effect before April 2012.
Even though work on GST technology infrastructure and processes was on track, there has not been much headway on discussions over the necessary constitutional amendments and taxation structure since the last meeting of the empowered committee of state finance ministers on December 6, the official added.
GST was originally slated for launch on April 1, 2010. After missing that deadline, the government had proposed to introduce it in April 2011, but finance ministry officials have already said this would also not be possible. The ministry had then hoped to roll out the new regime from October 2011, but that now appears an unlikely possibility, given the spat between the government and Opposition.
OFF TRACK Not much headway made on GST legislation or tax structure Launch was slated for Apr 2010, but has been postponed twice Govt may be able to table Bill in the next monsoon session BJP-ruled states, UP and TN have strongly opposed GST Bill
After the government failed to table legislation for GST in Parliament in the monsoon session last August due to a lack of consensus among states, it was pinning its hopes on the winter session in December. However, it could not bring all the states on board in the intervening three months between the two sessions.
Moreover, the entire winter session was washed out due to Opposition disruptions and the logjam could spill over into the Budget session. If all the outstanding wrinkles are ironed out in the next few weeks, the government may be able to table the necessary Bill in the next monsoon session in July. But it will still require review by a standing committee, clearance by the House and ratification by state legislatures.
While Congress-ruled state governments have agreed to the proposed constitutional amendments for GST, BJP-ruled states, as well as Uttar Pradesh and Tamil Nadu, have strongly opposed them. The last meeting of the empowered committee was attended by only eight state finance ministers.