A midnight event in Parliament’s central hall on June 30 will roll out Goods and Services Tax (GST), with the government announcing a grand launch to mark the occasion billed as India’s biggest ever reforms initiative.

GST will kick in from July 1, ending more than 11 years of hectic confabulations among the Centre and the states shepherded by several Union and state finance ministers, and withstanding testy relations often marked by political brinkmanship.

"The official launch will take place in the presence of the President of India in Parliament’s central hall," Finance Minister Arun Jaitely said at a press conference on Tuesday.

Prime Minister Narendra Modi, Vice-President Hamid Ansari, Lok Sabha Speaker Sumitra Mahajan, two former Prime Ministers—Manmohan Singh and the HD Deve Gowda—and Parliamentarians will be present in the launch event, reminiscent of August 15, 1947 marked by India’s first Prime Minister Jawaharlal Nehru’s famous "Tryst with Destiny" midnight speech in Parliament.

"There will be a brief function of about one hour, where the Prime Minister and the President will speak on the subject. Two short films on the subject of GST will be screened," Jaitley said.

The Finance Minister credited all political parties and previous governments for GST, which will overhaul India’s indirect tax system by consolidating an untidy patchwork of local and central duties into a single levy, make the tax administration more efficient and turn India into a common national market by removing fiscal barriers among states.

"In the entire exercise, many governments at the Centre and states have played a major role," Jaitley said.

All members of Parliament, all state finance ministers, GST Council members, GST Council officials, all former chairpersons of the erstwhile Empowered Committee (EC) of state FMs will be invited to be part of the launch even on June 30, Jaitley said.

The Empowered Committee (EC) was first launched when Yashwant Sinha was the finance minister about 15 years ago. The UPA government first announced in 2006 the intent to roll out GST. The Constitution Amendment Bill was first introduced in Parliament in 2011 and Parliament’s both houses passed the Constitution Amendment Bill in 2016.

The GST Council, headed by the Union Finance Minister was shortly formed thereafter and have fixed rates, approved subordinate legislations and drafted the supplementary central and state GST laws through a process of consensus building.

"All decisions of the GST Council have been through consensus," Jaitley said. All states except Kerala and Jammu and Kashmir (J&K) have passed the SGST laws. While Kerala will pass the legislation this week, J&K will be guided by the special Constitutional provisions that govern the state.

"The entire political system is backing this," he said. "I strongly believe, if any state stays out both its traders and consumers will suffer because they cannot claim input tax credit (ITC)".

Input credit means at the time of paying tax on output, a producer, trader or service provider can reduce the tax already paid on inputs.

"They will have to pay tax twice over. (Also) they will not get the benefits of the compensation package for revenue loss either," he said.

Under GST rules, states will be fully compensated up to five years for potential revenue loss, with FY16 as the base year for calculating revenue assuming a secular or long-term growth rate of 14 percent.

Jaitley said that over the medium and the long term, GST will usher in a more efficient system as it will "check evasion, revenues will grow and the spending capacity of governments will increase".

"In the short-term there will be some challenges, (but) it will have positive impact on GDP," he said. "These reforms is for the better. All reforms initially are seen as disruptive, but result-yielding in the long run".

The Finance Minister said businesses ought to have prepared themselves for a GST rollout by July 1.

"Nobody had any business not be ready, we have been saying this for last six months. There are two-and-half weeks still available to get ready. If they are still not ready, then they don’t want to be ready," he said.

On Sunday, the GST Council extended the deadline for filing the first set of returns, a move that will likely soothe frayed nerves of millions of traders ahead of the new indirect tax system’s rollout from July 1.

The earlier rules required taxpayers to file returns by the 10th and the 15th of every month. On Sunday, the Council eased rules for July and August to ease taxpayers’ anxieties. Under the new system, taxpayers will have to make a self-declaration under a new form for the month of July by August 20 and for August by September 30. This will give tax payers extra time of about a month to file returns without worrying about penalties and fines.

Industry bodies and traders have repeatedly sought more time to enable glitch-free filing of returns, minimise erroneous entries and the get accustomed to the GST Network (GSTN).

"We are working on the premise that revenues will not come down because in an efficient system evasion will be checked," Jaitley said.

The Council also finalised the rules related to anti-profiteering. An ’anti-profiteering’ clause has been provided in the Centre GST (CGST) and State GST (SGST) laws, to ensure that business passes on the benefit of reduced tax incidence on goods or services to the consumers.

Such a framework will ensure that companies don’t arbitrarily raise prices of goods just before or after the implementation of GST from July 1.

The Centre has maintained that new tax rates will not push up inflation and the body will keep a check on price rise caused by profiteering.

"Giving an indicative price is not the government’s duty. I sincerely hope the anti-profiteering clause should act as a deterrent and not actually be used," Jaitley said.

 21 Jun 2017, 05:46 AM