Enough time given, GST will be implemented from July 1: Arun Jaitley

Warns that consumers in Kerala, Jammu and Kashmir will lose out on the benefits of a single national tax

Arun Jaitley today said that GST rollout will not be impacted by any delay in security clearance to the GST Network. However, BJP MP Subramanian Swamy raised concerns over GSTN’s shareholding pattern, saying it might compromise data security.

Brushing aside reservations from sections of industry as well as States such as West Bengal about the level of preparedness for the switch to the Goods and Services Tax (GST), Union Finance Minister Arun Jaitley said on Tuesday that the new indirect tax system would be kicked off on July 1 as the government had given enough time for people to be prepared for the transition.

He also warned that consumers and producers in Kerala and Jammu and Kashmir, which are yet to ratify the State GST law to facilitate the implementation of the GST under their jurisdiction, would lose out on the benefits of a single national tax.

“We have for the last six months been saying that the rollout will be on July 1. Nobody had any business not being ready,” Mr. Jaitley said.

“The readiness will be determined when you have to file the first return, which we have extended to September 15 [from August 10]. So two-and-a-half months more are there to get ready. And if he is still not ready, then I am afraid he doesn’t want to be ready,” he pointed out.

While 65 lakh out of 80 lakh assessees in the current indirect tax system have already registered themselves for the GST, the Finance Minister said in jest that the five people who had problems in registering were vocal about it on Twitter.

Special status of J&K

“Almost all States have cleared the State GST laws, except Kerala and J & K… I am told Kerala will consider it this week, while Jammu and Kashmir is going through the process and they will have to do it separately because of the State’s special status,” he said.

“I strongly believe that if any State keeps out for a transient time, both its consumers and producers will suffer as the producers will not get input tax credits and consumers will get more expensive products than the rest of the country. There will be another impact for States who don’t join — they won’t get the benefit of compensation for revenue loss for the first five years of GST,” Mr. Jaitley warned.

Revealing that a lot of undeclared goods were declared by entities in the “pre-GST” months of March, April and May, the Finance Minister said the GST would check tax evasion and raise the number of assessees in the long run.

“All reforms in their initial phase are seen as disruptive and in the long run as result-yielding. ...when the switch-over takes place, there will be some challenges in the short term… I anticipate over the medium and long term, revenues will grow as will the spending capacity of the States and the Centre as the system will be prone to checking evasion,” he said.