Mr Jaitley, time to bid your GST deadline goodbye

The Finance Minister needs to come up with a more realistic date for GST rollout

So here we are. Another washed out parliament session, another waste of taxpayers’ money. And this one was as bad as some of the lowest moments of the previous Lok Sabha, when a teetering, blundering UPA was in power, and the NDA tried its best to act as a most irresponsible opposition.

Now the tables are turned, any bridges for a compromise have been burnt, and the end result pretty much comes with a big box of déjà vu. The Modi government’s reform agenda has been derailed for now, and the two biggest legislative targets, Land Acquisition, and Goods and Service Tax, are nowhere close to where the centre, the industry, and the country wants them.

While a case can be made for further discussion and consensus on the issue of land acquisition, the constitutional amendment to GST could easily have passed the litmus test in Rajya Sabha had the government brought either the left parties or the AIDMK onboard, in spite of the Congress standing against it.

Now Finance Minister Arun Jaitley has said that the government would call for a special session to enable the passage of GST. But here is something to consider; a party with just 44 seats in Lok Sabha managed to bring the house down, metaphorically speaking, for the entire duration of the Monsoon Session. In the Upper House, Congress is still the single largest party, so it is unlikely that it will allow a smooth passage of the bill. Especially when the rules state that during the passage of any amendment to the Constitution, there should be no ruckus and the House should be in order.

It has now become quite apparent that there is no way that Jaitley, who is also the government’s troubleshooter-in-chief, can reach an understanding with the Congress, given how acrimonious and personal the attacks on each other had become this session.

Even if the Constitution Amendment Bill is passed in a special session, or for that matter even if it would have been passed in the Monsoon Session, the deadline of April 1, 2016 will cut it pretty close. Here is what still needs to be done: At least 50 per cent of the States’ legislatures have to ratify the constitutional amendments, Lok Sabha and Rajya Sabha have to pass the GST Bill (which is not the same as Constitution Amendment Bill) and the states have to pass their own GST bills.

Everyone knows that the legislative process is a slow one. And there are still several demands like 1 per cent additional levy to manufacturing states, and the revenue-neutral rate of GST that need to be ironed out. Some states, like Tamil Nadu, are still holding out on a number of proposals.

And that is even before one asks a few pertinent questions: How prepared is India Inc for GST? To what extent are businesses, manufacturing units, transporters, and logistics companies prepared for an entirely new taxation regime? How well is the Income Tax department answering the industry’s queries, and how is it readying the various sectors for GST?

One is of the opinion that instead of steaming ahead with what will be a rushed job, the Finance Minister would do well to delay the date of implementation and use the extra breathing space to work with the states and industry to create a less imperfect GST and ensure a smooth rollout in an environment where everyone is prepared for it. There will really be no harm in rolling out the new tax regime in middle of the next fiscal year, say by October 2016, or even by April 2017.

A job well done in the face of a stubborn opposition will definitely count as a win for the Prime Minister and his economic agenda. This is better than trying to meet a near-impossible deadline that could lead to a possible flawed and shoddy implementation by an equally stubborn government hell-bent on proving a point.