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GST delayed, rollout now likely on June or July 1

The rollout of the goods and services tax (GST) is likely to be delayed by two or three months, it is understood. Though the government is yet to lock down a date, but is likely to settle for either the first day of June or July 1.

Expectations are that the GST legislation will be introduced in the first half of the budget session by the Ministry of Finance when the government will seek to get it passed after the recess. While the new dates would delay the rollout, they are also well within the mandatory deadline of September after which the central and state governments will lose powers to levy any indirect taxes other than GST. Differences between the centre and the states, especially over the sharing of powers, has delayed the final approval for supporting legislations for GST, a tax reform which will for the first time bind the country into a common market.

Arguing that state finances cannot withstand the double whammy of demonetization and GST, states like Kerala and West Bengal had sought a delay in the implementation of the tax. GST will subsume a host of indirect taxes levied by the centre and the states, including excise duty, service tax, value-added tax, entry tax, luxury tax and entertainment tax.

Though its implementation would have been easier from the beginning of a fiscal year, it can be implemented anytime. GST is an indirect tax levied at the point of sale and hence can be introduced at the beginning of any month.

Finance minister Arun Jaitley is expected to announce the timetable for this ambitious tax reform in his budget speech on the first of February. The finance ministry will also have to work out its revenue estimates for 2017-18 based on GST’s implementation date.