Analysis of the GST Council's Continued Impasse

The Goods and Services Tax (GST) Council convened for its ninth meeting today, aiming to resolve the contentious matter of dual control over taxpayers. Despite high expectations, a consensus remained elusive, as the finance minister could not secure agreement among states regarding revenue sharing and the division of administrative powers.

Potential Consequences of the Unresolved Issues

The persistent disagreement among states might compel the central government to initiate a vote, a method previously avoided in favor of unanimous decisions. Key implications of this latest meeting include:

• The planned GST implementation on April 1, 2017, is now highly improbable, and a new start date from the government is anticipated.
• Small and Medium-sized Enterprises (SMEs) may welcome this delay, as it provides them with additional time to prepare for and execute the transition to the new GST system.
• GSTN, the entity tasked with establishing the IT infrastructure for GST, will gain more time to thoroughly test and enhance the system's robustness.
• Should the central government resort to voting on these issues, it could potentially dissatisfy certain states, such as West Bengal and Kerala.
• With April 1, 2017, no longer a feasible launch date, the Ministry of Finance might need to revise its draft budget and existing indirect tax provisions under the current regime.

Mandatory Implementation Deadline

Regardless of the delay, GST must be implemented by September 16, 2017. This deadline is constitutionally mandated, as an amendment to the Indian Constitution allows both central and state governments to collect current indirect taxes for only one year following the amendment bill's passage, which falls on this date.

For additional information and resources concerning the Goods and Services Tax, refer to this guide.