GST regime could see massive relocation of tax officials

After facing legal, technical and infrastructural challenges in implementation of the already-delayed Goods and Services Tax (GST), the government has been confronted with new problems — manpower management and dislocation of its offices under the proposed indirect tax regime.

A committee of the finance ministry has found GST would require a lot of relocation of offices and officers.

Presently, the Union government’s field officers are located in cities where manufacturing activity is happening, whereas states do not have much to do with manufacturing and levy of sales tax or value added tax (VAT) on the point of trading of goods. In GST, for instance, the Centre may need to have its office in Nagpur, which is not a manufacturing hub, but an important trading centre for states.

“There will be dislocation of offices unless extensive computerisation is done. More than five million traders cannot file their tax returns electronically from the first day of GST implementation. We have to reorient our manpower. There will be a lot of resistance from our own officers. For such a big change, we need to plan on change resistance, otherwise it will create problems,” said a finance ministry official.

The committee, comprising three commissioners of the finance ministry, was asked to survey and identify the location of trading centres, study the impact of GST on those centres, find out the places of major assessee base and the workforce that would be shifted. The committee, set up in December 2009, co-opted more members and conducted a pilot study in Hyderabad, Bangalore and Chennai. It gave its preliminary findings in March. A final report is likely to be submitted in May.

The Centre says it has the IT infrastructure in place, but it was a major issue with states, especially in case of the inter-state GST, or IGST, which would be collected by the Centre and passed on to the states. IGST has to be transferred electronically. The Centre’s online tax payment applications ACES would be tweaked a bit to take care of GST. Computerisation of states, however, is a concern. Maharashtra, Gujarat and Tamil Nadu are even ahead of Centre, but a large number of states do not have the infrastructure.

“The Centre is working on a project with the states to upgrade their IT infrastructure. There is a great variation and the government will assist them because it has to be a common platform. Unlike VAT, where implementation could be done in parts, here all have to join at the same time,” the official said.