Budget hints at roll-out of GST on July 1
By Jyoti Mukul
February 1, 2017. 11:56 IST
GST would subsume central and state levies like excise duty, service tax and VAT
The Union Budget has hinted at July 1, 2016, as the roll-out date for goods and services tax. In midst of state elections, the NDA government, however, did not go in for the much-expected increase in service tax rate.
Finance minister Arun Jaitley did not give any timeline on the new indirect tax regime. The excise duty notification for inputs used for fuel cell biogas power system, bio-gas, hydrogen and bio-methane, however, says the changes will not apply after June 30, 2017, hinting at a July roll-out of GST.
M S Mani, senior director, indirect tax, Deloitte Haskins & Sells LLP, said the absence of any major changes in excise and service tax confirms that the government is "definitively moving" to GST from July 1, 2017. “I have preferred not to make many changes in current regime of Excise & Service Tax because the same are to be replaced by GST soon,” Jaitely said in the Lok Sabha.
Mani said businesses that had put GST preparation on the backburner would now need to undertake a crash course in getting GST ready as its introduction is imminent.
Jaitley said the government would launch an outreach programme with industry from April 1, 2017. Labelling GST and demonetisation as “tectonic policy initiatives”, he said India was one of the very few economies undertaking transformational reforms. “There has been substantial progress towards ushering in GST, by far, the biggest tax reform since independence. Since the enactment of the Constitution (One Hundred and First Amendment) Act, 2016, the preparatory work for this path-breaking reform has been a top priority for the Government,” he said. Several teams of officers both from the states and Central Board of Excise and Customs have been working tirelessly to give finishing touch to the Model GST law and rules and other details.
The GST Council, headed by Union finance minister and state ministers as its member, has so far held nine meetings to discuss various issues including broad contours of the GST rate structure, threshold exemption and parameters for composition scheme, details for compensation to states. Jaitley said the council has finalised its recommendations on almost all the issues “based on consensus and after spirited debate and discussions”.
GST would subsume central and state levies like excise duty, service tax and VAT. The proposed tax slabs so far are 5, 12, 18 and 28%. Implementation of GST is likely to bring more taxes both to Central and State Governments because of widening of tax net.
The Budget, however, has estimated a 9% increase in indirect tax collection at Rs 926,900 crore during 2017-18 over the revised estimate of Rs 851,869 crore in the current year.