Here are the five hurdles that the government faces in meeting the GST implementation deadline.
1) IGST and Dual control- Centre and the state governments have so far not been able to agree upon the issue of who will have a bigger say on goods and services that are sold between two or more states. The issue is a part of the IGST or inter-state GST law. The GST council has met 7 times so far and has cleared as many as 20 chapters of the model GST law. But the issues related to IGST have become the major bone of contention.
2) Demonetisation-effect: Central government’s decision to demonetise Rs 500, and Rs 1,000 notes in the country has led faced criticism from the non BJP ruled states like Kerala and West Bengal. West Bengal finance minister Amit Mitra has said that the timing for GST’s implementation may not be right, given the stress on state finances after demonetisation. “I’m deeply concerned about timing of the GST. People are talking about a recession. A 2 per cent fall in GDP is serious, (so) can GST happen?” Mr Mitra told NDTV on November 30.
3) GST Infrastructure: The implementation of GST requires a vast network of IT Infrastructure to help companies and government keep track of their value-addition to manufactured goods at different stages of the production process. Since the central and the state governments have not been able to come to terms on the SGST (states GST) and the IGST, it would be difficult for the industry to fully prepare itself for the roll out of GST by April, 2017.
4) Control over small taxpayers: States like Kerala, West Bengal, Uttarakhand, Uttar Pradesh and Tamil Nadu have insisted on exclusive control over small taxpayers, who earn less than Rs. 1.5 crore in annual revenue, for both goods and services. But Centre government has shown reluctance to give up its rights to collect on the basis of turnover.
5) Compensation given for state may not be enough: Before demonetisation, the GST council had decided states would be compensated out of a cess kitty of Rs 55,000 crore. It was then assumed that only three to four states would need compensation. But post demonetisation, most states have started demanding compensation at a higher rate.