Goods and Services Tax: Can Namo deliver?

In 2014 when Narendra Modi took over, voters in India, his admirers  -- all wanted India under Modi to take tough decisions and reboot its economy.

People expected miracles. PM trusted Arun Jaitley and possibly also Ajit Doval and other officials in the PMO.

But for failures, people would not blame Jaitley or Doval. Those who feel belied feel let down by none other than Modi himself. That's a challenge for Namo and he has to take it head on !

I have written on these lines earlier also. ut now the issue on hand is GST. 

The Narendra Modi government is showing urgency in getting the Goods and Services Tax (GST), the unified tax regime, rolled out across India by April 1, 2017. In order to achieve the same, Prime Minister Narendra Modi has directed in no unambiguous manner that all efforts be made to ensure that the government gets adequate time for parliamentary nod to the supporting bills.

For this, he has directed that even the winter session of Parliament be advanced to the second week of November. An early winter session of Parliament by second week of November will help quick passage of the central GST bill and also the Integrated GST bill. By first week of December, the government wants to clear the paper works and legislative matters.  

Modi in a meeting with Finance Minister Arun Jaitley and senior officials from the Finance ministry and the Prime Minister's Office (PMO) last Wednesday reviewed the government's preparation on the same.

"In order to ensure that there is no slippage on date of implementation of GST from April 1, 2017, the Prime Minister reviewed the progress made on various steps needed for the roll-out of GST relating to preparation of Model GST laws and rules to be framed,”, a PMO statement said.

Importantly, why this urgency? 

As usual PM Modi wants to be seen as a “performer Prime Minister” and wants to deliver the common tax regime according to the already announced deadline. Otherwise it again gets postponed may be to April 1, 2018.  

Significantly, the push for a no-holds barred approach to ensure GST implementation by Modi comes after Finance Minister Jaitley's acknowledgement that the deadline to roll out the GST was quite tough and there were a few hurdles ahead. 

On September 8, Jaitey had said the Centre and the states were "running against time", and there were issues, which the proposed GST Council would need to address. 
"After the notification and constitution of the GST Council, there are obviously some pending issues, which the council will have to resolve. So we have September and October and parts of November to do that," Jaitley had said.

Significantly, the push for a no-holds barred approach to ensure GST implementation by Modi comes after Finance Minister Jaitley's acknowledgement that the deadline to roll out the GST was quite tough and there were a few hurdles ahead. 

On September 8, Jaitley had said the Centre and the states were "running against time", and there were issues, which the proposed GST Council would need to address. 
"After the notification and constitution of the GST Council, there are obviously some pending issues, which the council will have to resolve. So we have September and October and parts of November to do that," Jaitley had said.

In the words of Union Cabinet Secretary P.K. Sinha; “GST is the biggest game changer. But it is also a challenge. We are working overtime to make it happen from April 1, 2017”. He further pointed out that a “silent revolution is happening and despite teething problems” and India would move on to accomplish the objectives and targets set in by the government in all sectors of economic activities.

Official sources said among the few hurdles the main issue to be addressed is: What will be the GST rate? This is being fiercely debated as base rates recommended by experts and stakeholders vary from around 15.5 per cent to as high as 26 per cent.

The opposition parties too seem to understand the desperation of the government. “We know their urgency. They want to keep with the deadline of April 1, 2017. But it will not be easy,” said a Janata Dal (U) leader.

Agree others, mere passing the GST bills by Parliament and state assemblies cannot enforce the unified tax regime across the country, said Samajwadi leader Dharmendra Yadav.

He says “there is a long way to go” as the newly set up GST Council headed by Finance Minister Jaitley has to figure out other issues too.

Experts and government officials say :the GST Council also has to put in place a dispute resolution mechanism. The necessary IT infrastructure backbone too, has to be set up. Working in coordination with Infosys, the Goods and Services Tax Network has targeted October 2016 for the commencement of transferring existing assessees to the new system. This is easier said than done as all backing has to be ensured either way - software and hardware tests.

The government also needs to ensure training for about one lakh officials at the central and state levels who are involved with indirect taxes.

Now, the answer to the basic question whether the “catalyst of change” – a description given to Modi by his admirers during his stint as Gujarat Chief Minister – would really work out and ensure GST rollout in the ultimate analysis – essentially remains in the womb of time.

(ends)