Finance Minister Arun Jaitley in his Budget Speech 2016 announced, “The Government shall also endeavour to continue with the ongoing reform programme and ensure the passage of the Constitutional amendments to enable the implementation of the Goods and Services Tax, the passage of Insolvency and Bankruptcy bill and other important reform measures which are pending before Parliament.” Stating that the proposed GST is the need of the hour, Mr. Jaitley emphasized that it has the capacity to strengthen the economy,
Clearly, GST is one of the prime agendas on the Government’s ‘to-do’ list. A welcome move for the Industry that can then heave a sigh of relief. However, there are concerns in various quarters as to the real implementation of the GST. Different sectors may be impacted differently and Industry players are yet not clear either on the rollout or the fallout they would feel post implementation of GST.
GST will be levied only at the nal destination of consumption based on VAT principle and not at various points and it is likely to be helpful in removing economic distortions. It is expected to build a transparent and corruption-free tax administration. A tax rate band has been provided to allow states flexibility in the initial years. To alleviate the concerns of the manufacturing states, an additional 1 per cent tax over and above the inter-state GST (IGST) has been proposed on inter-state trade of goods. In the new GST regime, customs, excise, service tax, central sales tax, value added tax, entry tax, octroi and other taxes are to be subsumed under an umbrella GST. Since the GST is a consumptionbased destination tax, the manufacturing states especially feel vulnerable. The Government has also indicated that it will subsume all the additional levies such as Krishi Kalyan and infrastructure cess in the GST within one year of its implementation, as quoted by Mr Ram Tirath, Member, (Budget), Central Board of Excise and Customs, in a PTI report. Delay in implementation of GST is seen as a major setback to India as an investment destination. The delay in GST is also expected to dampen enthusiasm around the flagship ‘Make in India’ initiative of the Government.