India's march toward a common market took another big step, increasing the possibility of the long-awaited goods and services tax (GST) being rolled out on April 1 next year. On Monday , the union cabinet approved the establishment of the GST Council, which will decide on the rate, exemptions, threshold and relevant legislation by November 22.
The first meeting of the council, to be chaired by Union Finance Minister Arun Jaitley , will be held on September 22 and 23. Revenue Secretary Hasmukh Adhia said the government is ahead of schedule on the GST rollout and is set to put it in place by the start of the next financial year.
Other members of the GST Council will be the union minister of state for finance in charge of the revenue department and state finance ministers. The union revenue secretary will act as he ex-officio secretary without voting rights. The finance ministry has already asked states to send the names of ministers they wish to nominate. The cabinet also approved the setting up of an attached GST Council secretariat.
GST is regarded as India's biggest tax reform since independence and will provide an estimated 1-2 percentage point boost to the economy by subsuming a plethora of central and state levies and creating a seamless national market.First mooted more than a decade ago, GST was to have been in place by 2010 but was held up due to lack of political consensus.
Jaitley said last week that the April 1 deadline was a stiff one but that the government was trying to keep that date. Having overcome resistance in Parliament to the constitutional amendment that paves the way for GST, the government has lost little time in pushing the process forward.
Adhia said the GST Council had two months to thrash out issues.
The government is looking to introduce the central GST (CGST) and integrated GST (IGST) legislation in the winter session of Parliament in November. State assemblies will also have to approve GST legislation.
Industry has sought six months from the day that the GST law is finalised for internal preparations but experts say companies will need to speed things up.
Adhia said states will have the flexibility to nominate any minister to the GST Council and he has already written to the state chief secretaries in this regard.