Last week, we had given reasons as to why there are more chances of the GST Bill getting passed in the Parliament in the winter session, and things have moved swiftly in favour of GST. But if the Bill is passed in this session, would it mean GST can be rolled out by 1 April 2016? If we see the activities that need to be completed before GST sees light of the day, four months seem inadequate. Let us see why -
The GST Bill has to be passed by both the Houses of the Parliament separately with two third members voting in favour. Hence, a consensus among parties would be required to get it through the Parliament. Moreover, any changes made to the Bill when it is being passed in Rajya Sabha will have to be approved again by the Lok Sabha.
Once the GST Bill is passed by both Houses of the Parliament, it would need ratification by majority of the States. Getting ratification by at least 15 of the 29 states does not look too difficult a task. After this, the Bill would be sent to the President for his assent. This may take a month or two, if not more.
Thereafter, the GST Act and rules for IGST, CGST and SGST would have to be prepared and passed by the Parliament (for Central Laws) and the State Legislatures (for State Laws). The Government has already published on its website, reports on four business processes (on returns, registrations, refunds and payment processes in GST regime). We hear that the draft law is also ready and is being discussed with States . This preparedness gives a sign that once the GST Bill is passed, the Government is aiming at speeding up the process for approval of the GST legislation as deliberations on the same have begun already. Due to sufficient deliberation at this stage, the passage of laws by Centre as well as States may take about a month or two.
Once the law is approved, it would form the basis for designing the GST Network (GSTN) infrastructure which is already underway. GSTN is expected to be the IT backbone for all GST processes, the heart and brain of GST in India. It will process registration, returns, refunds, tax payments connecting millions of taxpayers and 37 governments and many other stakeholders. This will take a few months though we believe work is already underway.
ERP service providers have also started their work on GST. Once the law is passed they would need some time to finalise their changes in the systems. Businesses would need more time to customise the ERP systems once the new versions/patches are released.
Though the above list is only a list of some of the main activities both by the Government and the other stakeholders, it shows that we may perhaps need more than four months to complete these and other activities. GST is an indirect tax and can be launched on any day of the year, though the beginning of the month might be ideal.
Whether the time required to complete the above activities would be four, six or nine months is more of a guess at this point. The experience of other countries may not help as the complexities of Indian GST are different than these countries, the nature (dual GST with States collaborating in the process) is unique and the people who would be executing from the government’s and industries’ side are also different.
It is for this reason, it would be better for organisations not to waste time crystal ball gazing on when GST would come. One would rather prepare a list of activities that he/ she would need to complete before GST comes and also assess the time required. It is better to err on the side of conservatism in this planning and assume a deadline of 1 April 2016. If GST comes on this date (which is difficult) you would be ready then, and if it does not, you have more time to complete any unfinished tasks.
None of these materials is offered, nor should be construed, as financial, legal or other professional advice. The contents contained or made available through this web page is not intended to create any relationship between the reader and KPMG
© 2016 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.