Challenges for GST implementation

The Goods and Services Tax (GST) will subsume all indirect taxes and would ensure seamless flow of goods and services across the country. As the name suggest, GST will be levied on both Goods (Manufacturing and Trading) and Services. GST will replace more than a dozen type of taxes including service tax, central excise duty, additional excise and customs duties, central surcharges and cesses, state VAT, state sales tax, entertainment tax not levied by local bodies, luxury tax, taxes on lottery, betting and gambling, tax on advertisements and state cesses and surcharges related to supply of goods and services. As per the resent statement of Mr. Finance Minister,  implementation of GST will boost the country’s GDP growth rate by 1%-2%.


The Government intention of implementing national wide GST from 1st April 2016 is largely depend upon following factors:

  • Adoption by Rajya Sabha – GST bill have been passed in the lower house of parliament. The passage of bill is seem difficult in the Rajya Sabha where the current government does not have sufficient majority. If the Constitution (122nd Amendment) Bill, 2014 (GST Bill) got blocked in ongoing monsoon session of Parliament, it would unduly delay the GST rollout scheduled on April 1, 2016.


  • Adoption by State Assemblies – Empowered committee/Central Government have to pass through same zeal in passing of the bill in majority states of the country


  • Drafting of GST Law – public at large extent is unknown of GST or don’t know the procedure of GST hence drafting of ideal GST Act and Rules at Central and State Level will be a cumbersome exercise. Further, Government needs to undertake various measures to make it understandable to public at large.


  • GST Counsel – GST counsel needs to be formulated within 30 days of passing of GST Bill. The Counsel may faces extreme challenges while addressing key issues, such as –


  1. Finalizing of GST rate
  2. Determination of the threshold limit –currently in central excise threshold limit is Rs 1.5 crore. Under VAT it varies. In service tax, exemption limit is Rs 10 Lacs
  3. Activates which will be exempted or zero rated
  4. Framework for exemption and composition


  • Treatment of interstate transaction of goods and services , determining the taxable event and model of payment and collection of tax could be a challenging task for authorities.


  • Implementing GSTN – The Government intention of implementing national wide GST from 1st April 2016 is largely depend upon development of GST Portal including Communication Network among Central and State Governments, tax payers and other stakeholders. This network will ensure smooth implementation of the IT platform with a common PAN – based taxpayer ID , a common return and a common challan.


The approval of this Bill in Rajya Sabha and consequently creation of GST Counsel by President are most important  event for rapid implementation of much awaited GST regime. Once it is approved, the next stage would be to get the approvals of various states and then get all the subordinate amendments drafted, circulated, accepted by all government and in the course of the year present before Parliament.

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