Many back-end accounting issues need to be addressed for early rollout of Goods and Services Tax Regime, according to senior government officials and private sector experts.
“The Department of Revenue is obliged to send us the draft accounting procedures, which we have not received as of now,” a senior official in the Department of Expenditure said in an interview.
“They also have to come up with a plan to incorporate the GST Network into the current Public Financial Management System in use in the government. We do not know what they have conceptualised as of now,” the official said.
While the Constitutional Amendment Bill to enable GST finally secured Parliament’s nod this month, several more steps remain to be taken on the political and legislative side to complete the transition from the current indirect tax regime.
To start with, at least 15 states have to ratify the Constitutional changes in their legislative assemblies, followed by the President’s approval of the amendments. A GST Council has to be formed to determine the actual tax rates and modalities and then the Cabinet has to approve the state, central and integrated GST laws.
Following this, the CGST and IGST laws have to be passed in Parliament. Each state has to pass the SGST law followed by the notification of the GST Rules.
There is still no clarity in the GST Bill about who the tax collection authority will be for GST, whether it will be the banks or some other body authorised by the government.
During the Monsoon Session of Parliament, Former Finance Minister P. Chidambaram had, during the debate on GST, said that the GST Bill was clumsy as it did not mention where the amount collected would go.
“Whoever the collection authority is, pilot projects have to be run before the full GST can be rolled out. Banks have not started any such pilots,” the Expenditure Department official said.
“In addition, there are other modalities apart from the rate that the GST Council will have to work out, such as the manner in which the IGST will be shared,” the official said. “Will it be shared on a daily, weekly, or monthly basis?”
“Once the rates are notified, companies will have to adapt themselves,” said Dinesh Kanabar, CEO, Dhruva Advisors.
“Let’s say one manufactures in Maharashtra and sells all over the country. Now such companies will have to register themselves in every state where consumption is happening, since GST is a consumption tax.
“There are also issues to do with place of supply rules for services, which will likely take some time,” Mr. Kanabar said.
“The April 1, 2017 deadline is doable but it will be a stretch,” said M.S. Mani, Senior Director, Deloitte India.
“If the state governments, Centre and GST Network all do their work together, then it will be possible but even then it will work only if these bodies really stretch themselves,” he said.