As the April 1 deadline for the implementation of the proposed Goods and Services Tax (GST) looks increasingly out of reach, the Ministry of Finance is likely to continue with its tradition of giving estimates for excise and service tax in the upcoming Budget for 2017-18 (April-March). Estimates for GST receipts for the next financial year will become a part of the revised estimates, not Budget estimates for 2017-18, officials in the know said.
“With uncertainty over April 1 deadline for GST, we will continue with giving estimates for excise and service tax in 2017-18 Budget. Earlier, when the dummy exercise of Budget was being undertaken, we had kept a separate column for GST estimate but now with the matter stuck in GST Council, we will continue with the existing system of estimates for indirect taxes,” a government official said.
The government is constitutionally mandated — as per the Constitution (One Hundred and First Amendment) Act, 2016 passed by Parliament last year — to roll out the indirect tax regime by September 16 this year. Finance minister Arun Jaitley has said that being a transactional tax, GST can be rolled out anytime between April 1-September 16, though the government wants to implement it as early as possible.
“It would be difficult to give indirect tax estimates with breakup (excise and services tax) for half year and then GST estimate for second half. The government has to bring in GST by September, then the estimates for GST will become part of revised estimates than Budget estimates for 2017-18,” another official aware of the developments said.
Usually, the finance ministry begins its pre-Budget meetings by October-end for determining the revised estimates for the ongoing financial year and estimates for the next financial year.
This week, in its eighth meeting, the GST Council was unable to thrash out a consensus over the crucial issue of dual control and definition of territory regarding high sea sales within 12 nautical miles in offshore area of coastal states. Most states, including BJP-ruled Gujarat, have ruled out the April 1 deadline and are expecting GST to be rolled out only after June.
The government is already lagging on the initial timeline for GST having already missed the initial target of Winter Session for passage of supporting legislations for GST. The Centre had initially intended to get the three bills relating to GST—Central GST (CGST) bill, Integrated GST (IGST) bill and the the bill for compensating states for revenue losses—passed in the Winter Session of Parliament.
If the states and the Centre are able to build a consensus on the pending issues in the next meeting of GST Council on January 16, the bills are likely to be brought up for passage in the Budget Session by the Centre. Subsequently, states will have to pass the state GST (SGST) bill, a mirror image of the CGST bill, in their respective assemblies.
The resolution of dual control, which pertains to division of administrative control over tax assessees between the Centre and the states, will be crucial for timely implementation of GST. States have been demanding exclusive control over tax assessees with annual turnover below Rs 1.5 crore, but Centre has not relented so far on this demand and the issue has been pending with the GST Council since its second meeting in September.
According to the updated figures shared by the Centre with the states, the likely taxpayer base in GST would be 107 lakhs, out of which states account for 67 per cent (71.7 lakhs) and Centre is estimated to account for 33 per cent (35.3 lakhs). There are around 81.4 lakh VAT dealers, out of which active dealers are 66.5 lakhs. For service tax, there are 38 lakhs assessees, out of which 26 lakhs are active assessees, while there are around 4,00,000 assessees for excise. Around 4,00,000 taxpayers are common to the Centre and the states.