GST rollout postponed, July 1 new date: Jaitley

Furthermore, the council was also able to resolve the issue of who would have control over taxing economic activities in territorial waters. The Centre was proposing to tax transactions that took place within 12 nautical miles from state borders. However, this was opposed by the states, including BJP-ruled Gujarat and Maharashtra along with other coastal states like Kerala, Karnataka and Odisha, who would have lost huge revenues.

On Thursday, the council decided to allow states to tax all economic activities in territorial waters up to 12 nautical miles.

These developments pave the way for various GST Bills—integrated GST, state GST (SGST) and Central GST (CGST)—to be tabled and cleared in Parliament and state Assemblies. The council, which will meet next on February 18, has discussed most clauses of the Bills and arrived at a consensus over them.

Once these Bills are passed, the GST can be implemented in the next few months.

Pratik Jain, partner and leader, indirect tax, PricewaterhouseCoopers, said with some clarity on the revised launch date (earlier date was April 1), that the CSGT could be passed by Parliament in the “second half of the Budget session”. “With indication of a revised implementation date of July 1 for GST, industry gets the much-needed clarity and some additional time for the preparation for this huge reform. It appears that the government would be able to get the central GST laws passed by Parliament in the second half of budget session now,” he said in statement issued by the accountancy firm.

Rakesh Bhargava, director, Taxmann, said that July 1 was a more “realistic deadline” for the rollout of GST. “It’s a welcome step. The government seems to have felt the pain of the industry and decided to give it ample time to make the required changes before getting GST implemented,” he said.

Harishanker Subramaniam, national leader, indirect tax, EY India, felt that the stage was now set for “introduction of GST Bills in Parliament and state assemblies in February/March after the next GST Council meeting”.

However, he added that the only issue hanging was that of the council categorising various goods and services under different GST rate tiers. The GST panel has decided a four-tier GST rate structure—5 per cent (merit goods), 12 per cent (lower band of standard rate), 18 per cent (higher band of standard rate) and 28 per cent-plus (demerit rate).