No GST on 1st April 2017
The Parliament is yet to pass the following three laws:
1. Central GST
2. IGST
3. Compensation Law
Similarly, the State legislatures have to pass the SGST. The drafts for these four laws have to be approved by the GST Council. The GST Council meeting on 2nd & 3rd Dec'16, failed and even if the Council approves the draft legislations in its next meeting on 11th & 12th Dec'17, they cannot be presented to and passed in this session of Parliament which ends on 16th Dec'17.
The main issue is on sharing the power to collect taxes by the Centre and the States. Majority of the States want assessees with turnover of less than Rs. 1.5 crore. Those above this turnover are to be shared between the Centre and the States.
This is not acceptable to the Centre, as it wants control over all the assessees, big or small.
States want control on three grounds:
1. State Governments have more association than the Centre with the small assessees. The States have to bear the ire of the taxpayers which the new tax will bring.
2. It will be difficult for small assessees to face several agencies.
3. There are 2.5 lakh State Government tax officials while there are only 70000 Central Employees. It is logical to hand over the larger number of assessees to State government.
Centre does not agree to this, as they fear that their power will be weakened. They also argue that in service tax, they too have association with small traders. Further they claim superiority in managing inter-state trade.
On this unfortunate note, the Council dispersed without a decision. The Council had solved far more complicated technical issues, but this power struggle could not be settled.
But GST has to come on or before September 15 2017, as Finance Minister Mr. Arun Jaitley sounded the warning bells that the Constitution does not permit delay in GST implementation; So, if as on 16 September 2017, there is no GST, then there is no taxation in the country. The biggest tax experiment in the country cannot be held up because the decision of controlling the assessees is pending. Maybe, a new Indian GST Service should be created which can administer the GST. The role of the administrative officers, Central and States is also limited, as all the activities are going to be online. Maybe for each State, an audit group headed by an Assistant Commissioner level officer with a hundred inspectors can do the job, with a maximum of 20,000 GST officers for the whole country.
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