Budget 2016: What about ‘GST’?
Published on Mon, Feb 29,2016 | 22:36, Updated at Mon, Feb 29 at 22:36Source : Moneycontrol.com
We can always recollect the Budget 2015-16 from last year where the Goods and Services Tax (GST) formed one of the major pillars for ‘Ease of Doing Business’ in India. And in stark contrast with last years Finance Ministers speech, this year we only heard a meagre reference of GST in FM Mr. Arun Jaitley’s budget speech, which read.
“The Government shall also endeavour to continue with the ongoing reform programme and ensure the passage of the Constitutional amendments to enable the implementation of the Goods and Service Tax”
GST was practically the focal point of stalling Indian Parliament over the past year and was rightly considered the ‘game changer’ for architecting the base of India’s ‘Make in India’ drive. So why was GST ignored in this budget 2016 speech? And if not mentioned, shall we already lose hope on GST? We believe not.
As GST remained a political hotbed over the past year, a direct reference of GST policies through the Budget Speech would not have been a prudent political decision in any case. Rather the Finance Minister chose to be smart, by disguisedly introducing various ‘transparency’ and ‘Ease of Doing Business’ driven changes, in line with the proposed GST regime. Many changes, although administrative, showcase the continuous commitment of the government towards GST. Some of the major proposed changes have been:
• Reorganizations of field formations of Central Excise and Service Tax in the event of implementation of GST; and
• Proposal to revamp the Maharashtra VAT Return procedures more in line with suggested GST Business Processes;
• The Allocation of GSTN Contract to Information Technology giant Infosys.
These small changes show enough promise that the GST is not yet down and out. Also the Economic Survey 2015-16 (released on 26th February 2016) which preceded the Union Budget 2016-17, has clearly indicated that GST would remain a central focus for India’s Make in India project. The Economic survey 2015-16 enumerates that:
• A move to GST would eliminate tax leakages due to rationalisation of indirect tax exemptions which account to an estimated cost of Rs. 3.3 lakh crore;
• GST would affect potentially 2-2.5 million excise and service taxpayers; and
• GST is an unprecedented reform in modern global tax history.
The Budget 2016 under the subtle tone of indirect tax changes i.e. improving litigation procedures, Digitization of government procedures, unifying interest rates, subsuming of 13 indirect taxes etc. is slowly but certainly moving towards an organized indirect tax system (GST). The Economic Survey 2015-16 acknowledges GST bill to be a step in the right direction. However, it also recognizes that a lot more needs to be done by the States, including, creating better physical IT infrastructure, procedural amendments, etc. in order to ascertain GST preparedness for the future. Thus, in the backdrop of Make in India, Manufacturing goals of India and proposed Budget changes, GST even though not mentioned in budget, still appears to be in the priority.
The authors are Pratik Shah – Partner, Jigar Doshi – Partner at SKP Business Consulting LLP and the above views are personal.
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