MUMBAI: Even as Arun Jaitley on Sunday said that the last possible day to pass GST is September 16, many are discussing of what would happen in a worst case scenario, if government were to miss even this deadline?
The government is required to implement the Goods and Services Tax (GST) by September 16, or there would be no tax law altogether after that since the validity of the recently passed GST bill lapses by then, point out experts.
The Parliamentary logjam, with the opposition being relentless in its attack on demonetisation, has impacted government’s planned timeline on GST. “If the GST doesn’t come into force by September 16, there is one view that existing specified tax legislations would cease to have effect. Hence, the government is working towards ensuring that GST is implemented before 16th September. It needs to be seen that if the same is not achieved whether the Government has an alternative plan,” said Dharmesh Panchal, India – West Indirect Tax leader, PwC. Experts say that the government may not be in a position to levy any indirect taxes as the current taxes would cease to exist while its replacement GST would not have come into force.
“Companies, mainly medium and small ones, are tackling the impact their businesses have faced due to demonetisation. Even the biggest of the companies have put GST on their low priority list. Everyone is expecting that it (GST) would be postponed,” said a senior tax expert.
Industry trackers point out that many medium and small industries may not be able to comply with the GST even by next year. “Mid and small size companies in sectors like transport, logistics, chemical manufacturing, salt manufacturing, iron and steel manufacturing are finding it hard to comply with GST,” the tax expert pointed out.
Many big companies and conglomerates were helping vendors, suppliers and distributors to be GST ready before the demonetisation, say experts. Some of these large companies have also provided specialised chartered accountants and technology experts to their vendors, distributors and suppliers.
However, many small companies that do not directly deal with big companies may have to handle the tax complexity and technology part all by themselves.
“The dilemma the government faces is that whether to go ahead with GST and deal with the further impact on the economic growth or postpone the GST and tackle the blushes,” a tax law expert said.