The much awaited goods and services tax (GST) will be delayed by half a year, say sources familiar with the developments.
The Rajya Sabha had approved the bill in August, and it might just be a whole year before the bill is turned into an act. In an earlier IOS report, we noted that the government was planning an April rollout for the GST. However, experts had predicted a delay, and rightly so.
N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy is somewhat apprehensive about the implementation. He says,
“Since April 1 looks difficult, the government has little option but to bring in GST from any month next year. Since it is a transaction tax, it can be brought in at any time. However, the challenge will be to do a revenue forecast in the budget. It will be prone to huge errors.”
The GST will include the tax collected at source (TCS). The law says that companies will have to deduct the TCS before they pay their sellers and file the returns. Etailers are not happy with this, as they feel that it will only compound the taxes. This TCS will not include ‘aggregators’ like Ola and Uber. A separate notification will be provided to cover aggregators.
Ready or not, here comes GST
Flipkart has begun its preparations to welcome the GST as early as in September. However, the others like Amazon and Snapdeal may not be GST ready yet. We think its high time they made the necessary technical changes so that they are not caught unawares when the GST arrives!
While the GST has its disadvantages, it will certainly free companies of the entry tax that state governments have been enforcing (which causes much distress to etailers). The GST will also centralise other taxes like luxury tax, excise duty, service tax, VAT and entertainment tax.
All said and done, the GST will definitely bring relief to Indian ecommerce. The sooner it is implemented, the better.