Highlights of the government's press conference on GST
Following the passage of the 122nd Constitutional Amendment Bill (CAB) in the Rajya Sabha, Finance Minister Arun Jaitley held a press conference on 4 August 2016 in New Delhi to unveil the roadmap towards the implementation of the Goods and Services Tax (GST). The Revenue Secretary, Hasmukh Adhia, also provided a detailed presentation (click here to view the presentation) on the establishment of a legal framework, roadmap for IT infrastructure and change management under the GST regime.
The Revenue Secretary has stated a number of times that the government is looking to implement the new law from 1 April 2017. He further said that in the next 30 days, 50% of the states are expected to approve the CAB. The government is now extremely optimistic that it will be able to finish all parliamentary procedures and implement the new law from 1 April 2017.
The key highlights of the press conference have been reiterated below:
- Rate of tax: The Revenue Secretary stated that the rate of tax is currently under the consideration of the GST Council. However, he also said that the rate of 18% currently suggested by the CEA report may not be the actual rate under GST as it has not accounted for the various factors and changes that took place in the economy over the past two years. The Finance Minister further added that the fate of cesses such as Swachh Bharat Cess and Krishi Kalyan Cess shall be considered by the GST Council at the time of deciding the rate of tax.
- Threshold limit: The Revenue Secretary said that a consensus on the threshold limit is yet to be arrived upon in the Empowered Committee of Finance Ministers and the threshold limits under discussion are INR 1 million and INR 2.5 million. The threshold for composition levy must also be revisited.
- IT system: The GST Network (GSTN) which would be the backbone for the smooth implementation of GST is at an advanced stage of development. The Revenue Secretary also stated that three software modules - registration, return filing and payment of taxes - are ready. Furthermore, 17 states have given their backend processing work to the GSTN and others are already in the process of making their own backend processing models for GST. The government is currently aiming at getting the system ready by December-end. The following three months will be reserved for live-testing the software.
- Returns: During his presentation, the Revenue Secretary also discussed the mechanism of returns under the GST regime, wherein separate types of returns may be prescribed in the case of B2C and B2B companies. In the case of B2C transactions and for assessees not having inter-state sales, a single return will be required to be filed which discloses the turnover details of the company for the return period. However, for B2B transactions and transactions involving inter-state supplies, assessees will be required to file four returns each month, wherein the data in the first of the four returns (the outward supplies return) will be auto-populated subsequently in the remaining three returns with the help of the GST software.
- Registration: Under the GST system, all existing assessees registered under the current indirect taxes will be automatically migrated to the new regime. For new assessees, registration will be provided within three days of application, provided no query has been raised by the authorities.
- Exemption list: The central and the state governments are currently deliberating upon the exemption list and the same will be finalised on the recommendation of the GST Council.
- Dual control: The Revenue Secretary specifically stated that there would be no dual control by the central and the state government authorities in the case of scrutiny, audits and assessments under the GST regime. As far as assessments are concerned, the Revenue Secretary suggested that the central and state governments will have to cross-empower each other to save the assessee from dual assessment on the same transaction.
- Money Bill: The Finance Minister made a reference to Article 110(1)(a) which states that a Bill shall be deemed to be a Money Bill if it contains provisions dealing with the imposition, abolition, remission, alteration or regulation of any tax. He added that the government will proceed as per the provisions of the Constitution while introducing the final legislation.
- Change management: The government will be conducting training workshops for 60,000 assessing officers for the centre as well as states, in a phased manner with the help of the National Academy of Customs, Excise and Narcotics (NACEN). Furthermore, the government has also commenced with the ‘outreach programme’ in four to five big cities wherein the government officials will be interacting with various trade associations and explaining the processes under GST.