GST - Implementation may be further delayed

I had earlier mentioned in my post that the GST implementation has been delayed from 1-Apr-2010 to 1-Oct-2010.

But now it seems that it may further delayed as it looks to iron-out differences with the states. The State finance ministers are scheduled to meet in mid-January to discuss details and timing.


There was a fear that the States may loose out if the GST is rolled out. In order to compensate states for potential lost revenue, a government panel has proposed to create a 500 billion rupee (USD10.8 billion) fund as incentive for states to buy into GST.

span style="font-family: Georgia, "Times New Roman", serif;">What are the next steps?

• The legislation to make constitutional amendments needs to be finalised 
• The mechanism for administering the tax needs to be created.
• The government also needs to set up the technology infrastructure to manage the tax.

What would be the revenue impact?


The GST is initially intended to be revenue-neutral but is eventually expected to increase the tax - thanks to more efficient collection and increased compliance. "It will smoothen the tax process, reduce transaction costs and raise the tax-to-GDP ratio," said DK Joshi, economist at ratings agency Crisil in Mumbai.


I was watching a TV news today, that the BJP is apposing the GST Roll-out and feel that if the GST can be rolled out after meeting all challenges  by 1-Oct-2010, it would be a great achievement by the Finance Minister.

Cheers,

Gopal