New Delhi
Federal and state tax official have finally reached a breakthrough on India’s biggest tax reform, with Finance Minister Arun Jaitley on Monday announcing the rollout on the Goods and Services Tax (GST) would be pushed back three months to July 1.
The deadlock between federal and state authorities ended on Monday with states given control over most of India’s small taxpayers.
States will administer and control 90 per cent of tax revenue from business with annual turnover of up to 15 million rupees ($220,000, Dh807,400). Businesses above the 15 million rupees threshold would be controlled by state and federal in a 50/50 ratio.
Finance Minister Arun Jaitley insisted that each tax payer will be assessed only once and by only one authority.
Besides ceding control, federal officials also agreed to the demand of coastal states, allowing them to tax economic activity in 12 nautical miles even though constitutionally the Centre has jurisdiction over territorial waters.
“This is a significant headway,” Jaitley said after the meeting.
The stalemate over administration of GST had been holding up consensus in the GST Council since early November with four successive meetings failing to break the deadlock as the federal government was not in favour of a horizontal split. There was also concern that dual agencies auditing and scrutinising each taxpayer could end up acting at cross-purposes.
With the legislative calendar drawn up, Jaitley said “realistic” date for implementation of GST will be July 1 instead of previously planned April 1.
Since GST is a transactional tax, which is to be levied when a sale takes place, it does not necessarily have to be implemented from the beginning of the fiscal, he said.
