The much awaited new indirect tax regime Goods and Service Tax (GST) is unlikely to be implemented from the scheduled date of April 1, 2011, a top government official said on Tuesday.
“In all probability it (the introduction of GST) will miss the deadline,” Revenue Secretary Sunil Mitra told PTI.
GST 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.
He, however, did not say when the GST will actually come into effect.
Mr. Mitra said the Constitution Amendment Bill on GST may not be tabled in the ongoing monsoon session of Parliament as there is no consensus on the issue. The session ends on August 31.
“We had hoped if we had such an agreement (with States on GST Constitutional Amendment Bill) then we would be able to introduce the amendment in the present session. Now it is not possible,” Mitra said.
The BJP-ruled States and a few other States have been opposing the revised draft of the Constitution Amendment Bill on GST and sought one month more to build their views more firmly.
Mr. Mitra said if the draft Bill was introduced in the monsoon session, then after discussion and deliberation, it could have been voted in the Budget session in February.
“If we could set (constitutional amendment bill) in (monsoon session) it could have been examined by select committee and could be voted in the Winter Session.” he added.
“If it was voted and accepted then we would have time for ratification by 50 per cent State and for introduction of legislation, GST legislation and Central legislation, which could then be debated discussed and perhaps voted in the budget session,” he said.
In his meeting with the State GST panel last week, Finance Minister Pranab Mukherjee had emphasised the introduction of the Bill in the Monsoon Session and said the discussions between the Centre and States could run parallel.
BJP-ruled States had objected to the revised draft of the GST, saying it does not clarify how the changes will be brought about in the GST structure.
The earlier draft was rejected by the States on account of the proposed vesting of veto powers with the Union Finance Minister on State taxation issues.
The first draft had proposed setting up a GST Council to take decisions on GST with the consent of the Union Finance Minister and a two-third majority of States.
The revised draft, however, said the council could take a decision only when there is a consensus.
However, BJP-ruled States wanted to know the clear meaning of consensus and suggested changing this word with “consent”. Both the drafts have also suggested a Dispute Settlement Mechanism.
Mr. Mukherjee had said a third revised draft would be prepared to sort out States’ concerns.
The State Finance Ministers are likely to meet in early September to sort out the issue.