The last week has not been a good one for the chequered Goods and Services Tax (GST). Indeed, if the news reports on the proceedings of the Empowered Committee (EC) are anything to go by, there is a need to reflect on where GST is headed and whether it is likely to see the light of day anytime soon. Hence, the title to the article.
Before we discuss the outcomes of the EC meeting, let us appreciate the fact that GST is, in any case, not likely to be implemented before 2015 for the following reasons:
- The recent categorical assertion by the prime minister that GST will be implemented by the new government that will assume office, after the general elections in 2014;
- The new government will most likely assume office only by mid-2014, if not later; and
- GST is best introduced at the beginning of a fiscal year.
For all these reasons, the earliest likely introduction of this fundamental tax reform measure is April 2015. The question, therefore, is whether even this long-delayed tryst with GST will be met.
Let us now consider the matters that were debated by the EC in its meeting last week:
- Inclusion of petroleum products and alcohol within GST framework. The reported outcome of the EC meeting is that most member states have opposed this inclusion, ostensibly on grounds of revenue.
- Subsuming the entry tax in GST. Here again, the reported outcome of the EC meeting is negative and states have opposed the move.
- Passage of the Constitution Amendment Bill relating to GST by Parliament in its winter session of 2013. Here again, reports have it that certain states believe that the Bill should be considered by Parliament only after it is mooted by the new government that would take office at the Centre in mid-2014.
All these developments are dismaying, notwithstanding that the EC chairman, Abdul Rahim Rather, has apparently stated that a final view on these matters will only be taken by the EC in its next meeting in November. This is because it is very unlikely that the EC’s final decision will be contrary to the outcomes listed above and also because an agreement between the Centre and the EC is awaited on a host of other critical aspects of GST as well.
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