GST CAN COME EVEN AFTER ITS DEADLINE!!

Now it has almost become clear that the Goods and Services may not meet its deadline of April 1,2011 due to lack of consensus among the States and the Centre. So, we have to wait more for the new tax regime which is expected to replace excise duty , service tax on the Centre's end  and VAT on the States front, besides local levies ,cesses and surcharges. The Government failed to tabled the Constitution Amendment Bill in the monsoon session of the Parliament as the BJP-ruled states raised their voice against the revised draft of the Centre on the Constitution Amendment Bill.

However, a recent statement by the Finance Ministry indicated that the proposed GST may still be introduced sometime during 2011-12. GST is a transaction based tax. It is not necessary to introduce it only at the beginning of the next financial year. It can be introduced anytime in that year.

The original plan of the Finance Ministry for the Goods and Service Tax was to bring the Constitution Amendment Bill in the monsoon session of the Parliament and from there it would have been referred to the standing committee. After all the comments from the parliamentary panel, the bill could have been placed in the winter session. If it passed in that session , GST legislation could have been tabled in the Budget Session.

The first draft on the Constitution Amendment Bill was rejected by the Empowered Committee of the State Finance Ministers  because it proposed to give Veto Power to the Union Finance Minister on the State taxation issues. However, the revised draft from the Finance Ministry drops the main issue of giving Veto Power to the Union finance Minister and said that the Council could take a decision only when there is a Consensus.

But the BJP-ruled States along with some of the allies of the UPA, have been opposing the revised draft of the Constitutional Amendment Bill on GST and asked for more time to study that and give their views on the various provisions in the GST Bill . Also, they wanted to know the clear meaning of the consensus and suggested changing the word with "consent".

In order to remove their concerns , the Finance Ministry has prepared a third draft and a copy of which has already been given to the Empowered Committee which is now expected to meet on Sep20,2011 to discuss that draft. Now the Government is looking forward for the comments which would come out from the upcoming meeting of the Empowered Committee of the State Finance Ministers and most probably it would also clear the picture of the GST future to some extent.

But for the time being , it can only be said that the future of the GST is still uncertain.