FM admits there may be few months delay in GST rollout  

The rollout of goods and services tax is likely to miss its April 1, 2010 deadline, dealing a blow to the government’s efforts to create a unified national market for goods and services in the country. Finance minister Pranab Mukherjee on Friday admitted for the first time that there could be a few months delay in the implementation of the UPA government's major indirect tax reform.

"I am trying to stick to the time schedule, but I will not be surprised if there is delay of a few months," Mr Mukherjee said here.

The GST, which is a consumption tax, seeks to create a seamless pan-India market by allowing both manufacturers and service providers to offset state taxes paid on inputs sourced from another state.

However, there is no let-up in the preparations for the new tax structure as both states and the Centre look to roll it out in the next financial year itself. The alternative dates that are being considered for the rollout are July 1 and September 1.

The Centre is keen on moving a constitutional amendment in the winter session of Parliament to pave the way for states to tax services. But, Mr Mukherjee clarified that legislative measures will follow their own pace. Asked about Mr Mukherjee’s comments, Asim Dasgupta, the chairman of the empowered committee of state finance ministers and West Bengal finance minister, said, “Our collective target is April 1, 2010, and on this we will have discussions with the Union finance minister.”

The Centre and states are yet to converge on the rate of GST and the items that will be taxed, the most crucial aspects of any tax structure. Although, the Centre has given up on its demand for having a single rate structure and agreed to a dual rate structure to make the new tax more acceptable politically, the nitty-gritty remains to be finalised.

The draft discussion paper, which is being given finishing touches, will be published for public comments on November 10, after the Union finance minister meets the empowered committee.

Incidentally, states such as Madhya Pradesh, Tamil Nadu, Rajasthan and Chhattisgarh and other stakeholders had earlier cautioned against rushing into implementing GST from April 1, 2010 in absence of a robust IT infrastructure and extensive debate on the tax framework.

Source : Economic Times, India, dated 31/10/2009