GST will be reality by July 1st 2017 – the countdown has started.

Although the implementation of GST (Goods and Services Tax) – The biggest reform in indirect taxation in India had been talked about for over a decade, the speed towards its implementation in the last 6 months has been tremendous and sometimes frightening.

Although two earlier drafts of the legislation and 5 draft rules were made available to public viewing, the final legislation approved by the GST Council that were introduced have been made available to public only after they have been approved. The GST council has reviewed and updated the 5 draft rules that were made public and also gave their in principle approval to 4 further rules as on 31st March 2017.

Although the government talks about consensus from all parties for the introduction of the legislation, the GST legislation are being introduced as Monetary bills (legislation).

A monetary bill can be introduced in the Lower House of Parliament (Lokh Sabha). Once approved by the Lower House, the proposed legislation are send to the Upper House of Parliament (Rajya Sabha) for recommendation. The legislation do not require the approval of the Upper House but could consider their recommendations. The current Government has an absolute majority in the Lokh Sabha but does not have this privilege in the Rajya Sabha.

The final draft legislation approved by the GST council on 16th March 2017 were introduced in the Lokh Sabha on 29th March 2017 and were approved on the same date without any amendments.

The legislation which have been introduced at the Lokh Sabha and the revised rules for the legislation are available on the website of the Central Board of Excise and Customs (CBEC). The website also provides the revised FAQ on GST.

Tax payers have very little time to assess the implications of GST to prepare.

The government has also introduced the Taxation Laws (Amendment Bill) 2017 also as a monetary bill in Lokh Sabha on 31st March 2017 towards making amendments to existing legislation relating to Customs, central excise, service tax and such other legislation to align them to the GST framework.

With the fine print of the approved legislation and the rules approved by the GST council, public could start to assess the impact of the new regulations on their business.

With less than three months until 01 July 2017 – and quite some open points to resolve – such as product classification and tax rates which the GST council plans to take up only by Mid May 2017, the period until 01 July 2017 could be classified as nothing short of Chaos and uncertainty.

During the next weeks, we shall be reviewing these regulations with the objective of analyzing the impact on our client businesses.

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