GST roll out will miss deadline admits Pranab

Issues relating to constitutional amendment seen as roadblocks

“There are some problems in the way of implementing the GST (proposed to be made effective from April 1, 2011),” he said while addressing a seminar on GST organised by the Comptroller & Auditor General (CAG) here.

Major issues relating to constitution amendments required to roll out the new indirect tax system remain to be sorted out with states, he said.

Constitution amendments are required to put in place GST, which seeks to replace Central Excise and Service Tax at the Central level and Value Added Tax (VAT) and other local levies like Octroi at the state level.

Under the present scheme of things states cannot levy Service Tax. For this constitutional amendment is necessary.

The proposed Constitution Amendment Bill will not only have to be approved by Parliament it has to be ratified by two third majority of state assemblies.

The Center was planning to introduce CAB in the just concluded Winter Session of Parliament so that constitutional formalities including ratification by two third majority of state assemblies could be completed in time to put in place the new tax regime from April 1, 2011.

Now with the conclusion of the Winter Session, which was virtually washed out over Opposition demand for Joint Parliamentary Committee (JPC) probe into 2G scam, it is now certain that the GST would miss the dead line once again.

The GST was first proposed to be introduced from April 1 this year, but it was put off due to lack of consensus among Centre and states on various aspects of GST.

The Empowered Committee of State Finance Ministers on GST is yet to come out with any consensus view on the Centre’s proposal on constitution amendment bill for roll out of GST.

Some states, mainly BJP-ruled and a few others, oppose the Centre’s proposal to have a GST council which will be empowered to effect changes in the indirect tax system.

The council is proposed to be headed by Union Finance Minister and all states are proposed to be its members.

“In multi-party, multi-ethnic country like ours divergent views are bound to occur,” Mukherjee said and hoped that consensus would be found in Empowered Committee over the issue.

Indirectly admitting that it would be difficult to put in place the GST with effect from April 1 next year Mukherjee even indicated that the Centre would like to simultaneously roll out GST along with Direct Tax Code (DTC).

The DTC, which seeks to replace the archaic Income Tax Act, 1961 with a new direct tax regime comprising Income Tax and Corporate Tax, is proposed to be introduced from April One, 2012.