GST delay

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Bikky Khosla | 13 Dec, 2016
It is pretty clear by now that GST roll-out is unlikely by April 1, next year. The 6th meeting of the GST Council ended on Sunday without a consensus on any of the three key bills: Central GST, Integrated GST and State GST. The Centre wanted to table these bills in the ongoing winter session of Parliament ending on 16 December, but now they are likely to be tabled only in the budget session. The fallout has put a serious question mark on implementing GST by the targeted deadline of April 1, 2017. The Council will meet again on December 22-23, and I hope something positive will come out from the next meeting.

While finance minister Arun Jaitley has reiterated that the government is still aiming to meet the April 1 deadline, in the post-demonetisation scenario, a view is increasingly gaining ground that it is now good to have a late GST. The demonetisation scheme has taken a toll on the economy, with both manufacturing and services sectors suffering the brunt. It is also widely believed that short-term growth prospect of the economy is not favorable. In this scenario, GST implementation from April 1 could prove a double whammy for the economy. So, we should let the demonetisation dust settle before trying to deal with GST.

Another question is about preparedness. GST implementation will involve changes in the whole tax architecture, which is a big challenge. The demonetisation experience shows that sudden changes without adequate preparedness can prove counterproductive and even lead to chaos, and now the Centre must ensure, before plunging into GST, that every possible measure required for its effective implementation -- including framing of relevant laws, establishment of IT infrastructure, training of tax officers -- is adequately taken care off. Considering the enormity of this task, I think the delay can be taken as an opportunity to prepare better.

Meanwhile, it is unfortunate that the ongoing winter session of Parliament is nearing an end without any substantial business owing to Opposition ruckus over the demonetisation issue, even after a passionate appeal from President Pranab Mukherjee to members of Parliament to stop disruptions for "god's sake". Ever since the session began, both houses have functioned for less than a fifth of their scheduled time. It is unfortunate. The MPs should not forget that they are elected not to sit in 'dhrnas'. On the other hand, I think the ruling side should show a greater responsibility in running the business of Parliament.

I invite your opinions.