The Monsoon sitting has commenced, and still the clouds of uncertainty have not cleared over the GST (Goods and Services Tax) Law.
Hectic discussions are taking place and as on 27 July 2016, no consensus has been reached between the ruling and the opposition parties. The centre is in no mood to buckle to Congress demand.
Three claims made by the chief opposition party are –
- 1% tax on manufacturers
- An 18% cap for the GST rate
- An independent disputes resolution body
There are positive signs that the GST (Goods and Services Tax) bill will be placed before the Upper House in the present Session.
Its passage is important for the image of the nation as the worldview with interest the changing business scenario of the country.
The biggest stumbling happens to be the Congress, and it is unlikely to budge on its three demands. So the government has to seek support from other smaller and regional parties.
Even if the bill is passed in the present session, the task forward is not going to be smooth. The bill has to be placed before each state assembly and must be approved by the requisite number of votes.
The Bill is a Constitutional amendment and therefore it must be passed by 15 state assemblies before it will be presented to the President for his assent.
With the political scene in India deeply fissured and polarized, this is a Herculean task and one wrong step can spell disaster.
Further, all the 29 states and the two Legislative Union Territories will have to enact the State and Central laws in their respective assemblies after recommendations by the GST council.
The Goods and Services Tax bill proposes to adopt a uniform tax structure across India, and every state will have to be onboard with the laws in place for it to take effect.
Any delay in passage of the bill by the state assemblies will derail the whole process because the law will take effect all over the country and will not be implemented in a piecemeal manner.
The process of having a uniform tax regime across the nation is in its gestation period, and the most critical challenge will be the formulation of rules, tax rates, exemptions and other aspects of the bill.
The GST Council will require the consensus of three-fourths of the states and the central government to make the law effective. The bureaucracy will have to be sensitised and trained for the new law.
It will be a complete revamp of the industry and look at the history of the administration where the culture of red tape is omnipotent, the implementation of the law will take a long time.
Even if the Upper House aye the bill in the Monsoon Session the process will not be completed before April 2017. The earliest one can hope for a real legislation is 2018. By that time the present government would have completed four years in office.
It is unlikely for the ruling party to take the risk of price rise which is expected once provisions of the law are implemented in a pre-election year. Therefore the GST bill seems to be a utopian dream which is near but still very far from being implemented.