In 10 days, the government is scheduled to roll out India’s most ambitious indirect tax regime, the goods and service tax, which seeks to put in place a uniform tax structure for commodities across the country. Already under criticism for becoming needlessly complex, a prominent industry body Assocham has expressed fears that the deadline of July 1 may not be realistic.
If GST has to run from July 1, it needs a strong backbone but the signs of strain are showing already. For instance, the Goods and Services Tax Network, better known as GSTN, an organisation which forms the information technology backbone for the new tax regime, has come under fire for not taking on board enough businesses on the new electronic platform for the GST to roll out smoothly.
Industry body Assocham reportedly wrote a letter to the GST Council Chairman and Finance Minister Arun Jaitley asking for GST rollout to be deferred, stating that industry needed more time to learn and equip itself to move to the new structure.
GSTN is a non-government, private limited company which has been primarily given the responsibility of providing the Centre and the states with the IT infrastructure and services needed for the new tax regime. However, it has been mired in controversy due to the slow pace of development of necessary utilities, forcing those in the industry to question the efficiency of the organisation that has deployed IT giant Infosys to build the infrastructure.
For instance, the GSTN website currently urges users not to panic if they have not been able to submit their transition applications from current tax code to the new regime as the facility will only be available after June 25, five days before the slated GST roll out.
Luxury of time
“The official launch of the GST will take place on the midnight of June 30 and July 1 at a function which will be organised in Delhi,” Jaitley said after the 17th GST Council meeting on June 19, adding that there was no “luxury of time to defer the implementation” of GST.
Even then, the task is proving so uphill that some of the major filing requirements have been deferred till August, providing some relief to panicking businesses.
Interestingly, the GSTN is not even cleared by the ministry of home affairs yet as the security checks on the infrastructure are still ongoing, PTI reported on June 19. The process involves background checks of the stakeholders in the company and there has been no deadline set to finish this task.
The government has meanwhile roped in actor Amitabh Bachchan to promote GST in ad campaigns.
In a video posted on YouTube, Bachchan claims that the new tax regime is a unifying force as it is an “initiative to create ‘one nation, one tax, one market “ – a claim that no longer holds true with multiple slabs and cesses turning GST into a complex web.
The criticism of GSTN is not just from outside the party. Party leader Subramanian Swamy recently questioned the integrity of GSTN, terming it a “monumental fiasco” in a series of tweets. and asking that the implementing company be nationalised and a special investigation team set up.
This is not the first time that GSTN has come under fire. The organisation had earlier refused to be audited by the Comptroller and Auditor General of the country. The company, owned 51% by private entities and the rest by the government, insists that it is simply a “pass through” portal.
Earlier, Swamy had termed GSTN a “shady organisation” in the Rajya Sabha and called for its restructuring, arguing that an organisation handling public money can’t escape checks and balances.
There are about 80 lakh excise, service tax and value added tax assessees, out of which more than 64 lakh have already moved to the new network while remaining are reportedly facing problems in migration as the server has not been able to handle the traffic, according to reports. Assocham highlighted this in their letter and said that the industry needs more time to prepare for India’s biggest tax reform since independence.
“This being the status of preparedness of the GSTN, the taxpayers would find it very difficult to comply with GST requirements from July 1, 2017... We believe that industry deserves some more time and assistance to get prepared for GST implementation,” Assocham stated in the letter.