Now we may get a new deadline for GST-1st April 2012

CA SUDHIR HALAKHANDI , Last updated: 23 August 2010  



The extended deadline of GST i.e. 1st. April 2011 is now coming very near and the fact is that still the centre and the states are not agree on even the draft of the Constitution amendment  bill required for introducing the Goods and service tax in India.  See the draft No.1 was altogether rejected by the states on the ground of “Veto Power” of the Centre in the GST council so the team of Finance Ministry was very enthusiastic while preparing the Second draft and the Law makers at the centre were almost sure that there will be smooth sailing of Second Draft of constitutional amendment bill which has been prepared with “jet speed” with scrapping the provision of “Veto Power” of the centre in the GST council but again they proved wrong and opposition ruled states along with some of allies of UPA with their strong resistance got further time and also put forward further demands so the think tank at the centre are now again busy in making the “third draft” .

Now the timing of preparation of third draft is not known and then it will put again for discussion between the states and centre and who knows the circumstances thereafter require one more i.e. the “forth draft” and if this is going on then certainly the constitutional amendment bill is not going to be tabled in “Mansoon” session of parliament . Then we have only “winter session” and though officials are of the opinion that GST can be introduced from 1st. April 2011 if the constitutional amendment bill is tabled and got cleared  in the winter session. 

See the amazing feature of the GST – the states and centre both are “eager and agree” that the Indian public should be taxed with a new system of Indirect taxes for which they are constantly discussing since 2006 and in the last one year they are continuously putting the proposed Indirect tax system to “this way” or “that way” but still do not have a consensus between them.

If we are talking about preparedness of the “Trade and Industry” about GST, they are on very tight spot and have a very big problem about it because like “Cricketers” they are on the “GST Nets” since last one year but could not start the practice session because there coach is not declaring whether they have to compete in test match or one day and if it will be a one day then whether it will be 50-50 or 20-20. There is atmosphere of uncertainty about the format of GST, it’s rates, the common exemption list, the threshold limit, the power of states to “decide and vary” the tax rates etc. etc. …

See here there will be no problem for manufacturers because they are already under dual system of indirect taxation in the form of Central Excise at the central level and VAT at the state Level but traders will have to face first time the central Indirect tax system and the majority of them do not know how they will be taxed after introduction of GST. The Manufacturers having the benefit of threshold Limit under central excise are also having the same problem.

First of all the Law makers at the centre and the states have to agree on the modalities of the GST but they are constantly disagreeing on various matters even though they have taken more than sufficient time for it. See there is a dead lock between the “fiscal autonomy” and “fiscal discipline” and states are using their right to defend the “fiscal autonomy” very sensibly and strongly and have the guts to oppose the centre with strong defensive tactics.

This is the fact that  GST is beneficial to the Indian Economy but each and every compromise on basics of GST are degrading it quality wise but see the magic that one very powerful lobby is continuously propagating the benefits of GST since inception of talk on GST and amazingly they still projecting and propagating about the same “volume” of benefits to the Indian Economy and India Trade and Industry though lot of compromises have been made with the basic structure of GST and still the law makers at centre are ready for further compromises. Who enacted the principal that GST, in any form with so many compromises, will be useful and fruitful like its original form?  The fact is that we need GST but we can also live without GST for some more time instead of facing the defective and so much compromised format of GST. 

See most of the experts are blaming the states for delay in the introducing the GST without considering the ground realities and further not going into the whole game plan adopted by the centre. See only one recent instance in this respect.  The Centre wants “Veto” in GST council in the first draft and when the move was backfired then it retreated on the move but the FM now declared the GST council will only be a recommendatory body. Who will believe that centre wanted a “Veto” in a recommendatory body?   The fact is that if states are not ready for centre’s veto in GST council then it will now be a “recommendatory body” only. This is not my presumption but it is a logical result of recent happenings. Even now it is declared that states are free to choose the rates. So now the situation will be “free for all” and sufferer will be India economy and consumers. There should be a limit of distortion of GST.

The law makers have already lost the valuable time and at present the odds are not in their favour because before going for the GST they have to make an “agreement” between themselves i.e. the centre and the state and I think the FM has tried his best but there is still a deadlock and now it is open to Indian Taxpaying public that there is “something serious” for which centre and states have different views and questions are now being raised “what is the hurry” for GST?

So friends The Finance Minister have one more important thing on his agenda “DTC” have to give some of his valuable  time on it also hence the chances of GST on 1st April 2011 is no 50-50 and there is certainly a possibility that soon you will read a new date on the GST board “1st April 2012”.



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