Railways appoints consultants for GST impact assessment

Indian Railways has appointed lawyers V Lakshmi Kumaran and V Sridharan as consultants to prepare it for the goods and services tax (GST), apart from conducting an impact assessment. 

The two are partners in law firm Lakshmikumaran & Sridharan (L&S) and have worked with Infosys in setting up the Goods and Services Tax Network (GSTN). The firm specialises in tax laws.

“We were a domain expert in setting up the GSTN. For the railways, we are looking at the GST impact and transitional plans,” said V Subramanian, partner, L&S. 

The GSTN is a non-profit non-government firm that will provide IT infrastructure and services to the central and state governments and taxpayers.

Union Finance Minister Arun Jaitley had announced last week that the rate of the tax on the transport sector would be five per cent. Based on this, fares for the air-conditioned classes and freight are set to increase by at least 1.3 per cent. However, the impact of the GST on the railways is yet to be calculated.

“We want this consultant to assess the impact of the GST on the railways. Apart from that, they will also help us interpret GST rules, make references on certain issues that the railways should ask for, and aid the zonal railways to usher in the new regime,” said a railway official who did not wish to be named.

“For us, it is important to minimise the impact of the GST and that is the mandate for the law firm,” the official added.  The law firm will be asked to submit a report in this regard by July. However, critics said the railways was late in waking up to the tax change. The GST is expected to be a complex makeover for the railways, which has 17 zones. The new tax may have varying impacts in different zones. The railways is also planning to appoint the National Institute of Public Finance and Policy to prepare a report on ways to do away with Rs 30,000 crore of subsidies. The railways posted its worst operating ratio of revenue to expenses in 16 years at 96.9 per cent in 2016-17, mainly because of its  social obligations and the effects of the 7th Pay Commission recommendations.

Getting GST-ready

• Railways has appointed lawyers V Lakshmi Kumaran and V Sridharan as consultants to prepare it for the GST, apart from conducting an impact assessment 
• The two are partners in law firm  Lakshmikumaran & Sridharan (L&S) and have worked with Infosys in setting up the GSTN
• GST is expected to be a complex makeover for the railways, which has 17 zones. The new tax may have varying impacts in different zones
• Railways is also planning to appoint the National Institute of Public Finance and Policy to prepare a report on ways to do away with Rs 30,000 crore of subsidies