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Obstacles for GST even if it is passed in the monsoon session 2016

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New Delhi: Amidst speculations and heated debates on various media, the Rajya Sabha is expected to discuss and debate the proposed GST bill in the forthcoming Monsoon Session 2016.

In the meantime, the respective floor managers of various political parties are trying to reach a consensus among each other regarding the different clauses of the bill.

Although the NDA-led Government led by Narendra Modi has a comfortable majority in the Lok Sabha, it doesn’t have the required strength in Rajya Sabha, which is necessary to pass the GST bill. Hence, the government is trying its level best to bring the combined opposition to the terms.

Even though the majority of opposition parties including Left are in favour of the GST Bill, Congress is creating roadblocks by stating that the rate should be included in the constitutional amendment.

The Government should attempt to pass the GST bill to save face in front of the nation including international trade organisations in general.

Even if the GST bill is passed in Rajya Sabha in the current Monsoon session of Parliament, there are several practical obstacles to its final implementation.

Step 1 – Passing of GST Bill in state legislatures

The biggest problem with the GST bill is that it requires at least half of the state legislatures in the country to pass the bill by two third majorities.

However, this process will have to be completed after the passing of the bill in both houses of parliament.

After the state assemblies approve the bill, the main GST bill will be sent to the President under Article 368 of the Constitution for his assent.

The legislation clearly mandates that at least 15 state assemblies must pass the bill since it is a constitutional amendment bill. This is a very difficult process because the pass to be tabled in each state legislature, debated and put to vote.

The bill will get the required number of votes, but the main problem is states should agree to each and every clause. That’s why the bill is said to be effective from April 2017 since it requires time.

As of writing this, the task of passing the bill in state assemblies seems to be difficult except in few states like Assam, Maharashtra, Gujarat, Madhya Pradesh where the BJP is ruling.

Step 2 – State and Central GST Bills

The second major problem is that all 29 states and two legislative union territories would pass the respective state and central GST bills in their legislative assemblies. However, this should be done only after getting sanction from the GST council.

Every state should be taken into confidence before putting the GST framework in place since the GST is a uniform tax framework for the whole country.

If there is a delay in passing the crucial legislation like GST then it will not only slow down the progress of the reform process but also slows down development.

Step 3 – GST Council

The third step is to create and operate the GST council, which will be responsible for drafting the respective rules, tax rates, exemptions and other nuances.

Step 4 – Implementation of IT systems

The final step is to setup IT system, software development, training and awareness among people and industry. The implementation of complicated legislations like GST will be difficult in red taped country like India.

Read Also: Why passing of GST Bill will be beneficial for the Indian Economy?

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Ashutosh Aggarwal
Ashutosh Aggarwal is a Founder and Editor-In-Chief at The GST Blog. He holds Bachelor Degree in commerce. He is pursuing company secretary course and chartered accountancy course. Before started this blog, He worked as an accounts manager in a reputed MNC. Also, having an experience of teaching for all subjects of commerce for five years in his study point.