The challenges ahead for the GST

Everyone seems contented with the progress on the GST bill which is in the process of ratification by the states. The proceedings are being watched closely but we must understand that the legislation is likely to take its own course before it can become a constitutional amendment. We should have faith in the government machinery that they will do the needful to ensure the GST bill will be through. The thought process should be on the challenges that lie ahead in the smooth implementation of the GST. This is the time to work on them rigorously so as to meet the April 2017 deadline for the GST rollout.

A lot of talks are there on the elimination of the Katcha bills and the evasion of taxes by small businessmen and traders. The argument in the favour of this belief is that the GST will be applicable at every stage giving no chance to the trader to evade the taxes. If the input tax credit is to be claimed the tax must be paid on the product being sold out after the value addition. However, the mind of the tax evader must also be working hard in order to devise a tax evasion under such circumstances. In fact, it is quite likely that they may design complete working chains of unreported transactions from one supplier to the next and pose a challenge. For the GST to run smoothly, the lower rate of GST, ease of compliance and other incentives would be necessary to avoid evasion.

The IT infrastructure and software readiness would be another daunting task for the GST rollout to be on time. The government has recently reviewed the IT readiness for the GST. All the banks have been given a deadline of 30th Sep, 2016 to ensure that their IT systems are in place for networking with RBI. The GSTN or Goods and service network team along with the officials from CBEC and 29 banks took part in the review. The department of revenue is keeping a strict watch on the stakeholders for their IT preparedness.

A daunting task lies ahead for the GST council as it will act as a backbone for the entire GST rollout. The appointment of the GST council will be done within 60 days after the approval of the notification by the President of India. The Parliament is expected to enact the laws to make the CGST and IGST operational during the winter session of Parliament.

The entire framework for the GST will be brought out by the GST council. This will include the taxes, duties, Octroi and other levies that will be subsumed by GST. The applicable rates of GST and the exempt goods and services would be made public. The traders and service providers would be looking ahead to the threshold below which they will be exempt from tax. The GST council would also be expected to make the administrative arrangements for the implementation of GST and also bring out the mechanism for dispute resolution. The states will have a 67% voting power in the GST council as against the 33% with the Union government. Thus, there will be no chance for pushing through the decisions by the central government.

In the light of all these aspects, the GST rollout on time looks quite difficult but not impossible. It all depends on shifting the focus to the resolution of the bottlenecks and tight monitoring of the progress.

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