India's ambitious target for rolling out a uniform goods and services tax in India is already behind schedule and now it looks like the rollout may not happen for another year or so, a move that will upset the governments tax planning.
There are signals that the GST rollout is looking shaky even by September of the new fiscal. NDTV has learnt that differences between the centre and states will take longer than expected in getting settled and this could further derail the preparation for a timely rollout of the GST.
A mid-fiscal GST rollout, sometime in September-October of this year, is virtually ruled out. Apart from the time needed for constitutional amendments to introduce GST, lack of consensus over key issues like states wanting to levy dual rates for goods, different exemption thresholds and keeping alcohol and petroleum products out of the GST chain are expected to cause further delay.
According to finance ministry sources, even a April 1, 2011, timeline for a smooth introduction of GST seems ambitious.
Analysts say its unlikely the government would hold on to the same excise and service tax rates, with the possibility of GST getting postponed by a complete year.
This means a delay of over six months in introducing the GST could prompt policymakers to initiate a soft rollback of some of the excise and service tax rate cuts. While the coming budget might set the tone for it, the actual rollback could even happen sometime later in April-May when the budget gets passed in the Parliament.