'GST may not come into force in Apr next year'

The finance ministry on Thursday said the proposed Goods and Services Tax (GST) might not come into force along with the Direct Taxes Code (DTC) in April 2012.

Revenue Secretary Sunil Mitra said the amendments to the Constitution required for rolling out GST might not happen in the current financial year. He, however, added the government had the flexibility to introduce it any time during a financial year unlike direct tax legislation.

“Ideally, the government will have liked to bring both DTC and GST together… But the legislation cannot be voted upon until the ratification is completed... There may be problem on the time factor (April 1, 2012),” Mitra said at a post-Budget conference by industry chamber Confederation of Indian Industry (CII).

The finance ministry is planning to table the Constitutional Amendment Bill for GST in the later part of the ongoing Session of Parliament. It will then go to the Parliamentary Standing Committee on Finance. After that, it will have to be ratified by the legislatures of at least half of the states.

“If the Standing Committee gives its suggestion towards the end of the Winter Session, the government can present it for voting in Parliament earliest in the next Budget Session. Once it is voted in Parliament, it has to go for ratification of 50 per cent states that will take some time,” Mitra added.

The central government and the state governments have now been engaged for almost four years in developing a roadmap for the rollout of GST. It has missed the deadline twice. In the Union Budget 2007-08, it was suggested that GST be implemented with effect from April 1, 2010. The date was later revised to April 2011 after the Centre and the states failed to reach a consensus.

The draft Constitutional Amendment Bill, which has been revised thrice, proposes to create a GST Council through an Act of Parliament, instead of Presidential order, as proposed in the previous draft.

In the first draft, the Centre had proposed veto power for the Union finance minister in the GST Council and said the decision would be binding on the Union government and all the states. After the states strongly opposed the proposed changes, the finance ministry came out with a second draft, where it said every decision of the Council would be with the consensus of all members present in a meeting.