The government will not blink on rolling out the goods and services tax (GST) from July 1, Finance Minister Arun Jaitley said
on Tuesday, emphasising that businesses cannot give any excuse for not
being ready as enough time was given to them for preparation.
Ruling out deferring the roll-out because of a small number of people
who say businesses are not ready, he said when reforms are implemented
"the first principle is you should never blink. If you blink, then you
get derailed." "We have for the last six months saying that the date is
July 1. Nobody had any business to be not ready," he said.
Besides, additional time has been given in the initial period for
filing of the results, thus, giving enough time to prepare for the
transition, he said.
However, implementation of the GST, which will unify more than a dozen
separate levies to create a single market, may result in "some
disruption" and "technological glitches" initially as traders and the
smallest of businesses will have to file returns online, he added.
GST, which was originally planned to be implemented from April 1 but
was deferred by three months, will be launched at a grand function in
the historic Central Hall of Parliament on the midnight of June 30.
"GST will
be implemented from July 1. The President of India will officially
launch the new indirect tax regime on June 30 midnight," said Jaitley.
Besides the President of India and Prime Minister Narendra Modi, Vice President Hamid Ansari and two former prime ministers Manmohan Singh and H D Deve Gowda and Lok Sabha Speaker Sumitra Mahajan will be on the dais during the hour-long event.
The biggest tax reform since Independence, which will gradually reshape India’s business landscape by making the world’s fastest-growing major economy an easier place to do business in, would bring down barriers between 30 states and unifying the $2 trillion economy and 1.3 billion people into a single market.
Jaitley said GST over the medium- to long-term will lead to higher revenues to Centre and states, while also increasing the size of the economy and having a positive impact on gross domestic product.
"We should be prepared when the switchover takes place. In the
short-term, there will be some challenges," he said. "The reform step is
for betterment. All reforms initially are seen as disruptive, and in
the long run are seen as result-yielding reform."
Jaitley said the process of registration of existing central excise,
service tax and state value-added tax payers in the new system was
"going on well".
"It is not a very complicated process," he said, adding GST will check tax evasion and in the long run lead to rise in number of the assessees.
As many as 6.5 million assesses have already registered and more are
expected to sign up. "65 lakh (6.5 million) who have registered did not
face problems; the five who have (faced problems) are on Twitter," he
quipped.
On the tech backbone GST Network’s
(GSTN) security clearance that is yet to come by from the home
ministry, Jaitley said that it was only a procedural matter.
"It (GSTN) is already functioning. Security clearance to GSTN is a procedural matter they go on," he said.
Jaitley said the government has already relaxed the dates for filing of
initial returns and traders and businesses now have time till September
5, instead of previous August 10, for filing the returns and being
ready.
"There is still two-and-a-half months to be ready, but if he (business)
is still not ready, I am afraid, but he doesn’t want to be ready," he
said.
Reminiscent of India’s tryst with destiny at the midnight of August
14-15, 1947, Parliament’s historic Central Hall will host an hour-long
function on the intervening night of June 30-July 1 to mark the roll-out
of GST, Jaitley said the GST Council
has arrived at tax rates on most of the commodities on the basis on
"equivalence" so that incidence of tax remains at the current level.
"The tax rates that has been fixed, that will apparently lower our tax
revenues. But we are hoping that even after reducing rates the revenues
won’t come down because evasion would be checked in an efficient
system," he said.
Asked about GST’s impact on inflation, he said when tax rates come down
it also has an impact on inflation, but it would also depend on monsoon
and oil prices.
"In some cases, because there are public interests involved, we have,
in fact, brought down the tax rates. On first principle, Centre and
states have suffered a revenue loss but we are hoping to make up for
that loss because of more efficient system," he said.
The anti-profiteering clause is transient and should act as a deterrent. "I hope we are not compelled to use it," he said.
He said almost all states have cleared the State GST (SGST) Act, with the exception of Jammu & Kashmir and Kerala.
"I strongly believe that any state keeps out, both its traders and
consumers will suffer loss. Because they will not get the benefit of
input tax, they will have to pay tax twice and the consumers will get
materials which is costlier than rest of the country. Also compensation
package won’t be given to states who do not implement GST," Jaitley
said.