Rules will be issued to deter unscrupulous businesses from exploiting the GST -- set to be launched on July 1 -- to gouge customers, said revenue secretary at the Finance Ministry Hasmukh Adhia.
Adhia told news agency Reuters on Saturday that the technology driving GST, India's biggest tax reform in the last 70 years, is robust and dismissed fears that the tax is too complicated.
"Everything is ready. We will roll out on July 1," he told Reuters in an interview at his office in North Block, a sandstone edifice in the heart of New Delhi dating from the British colonial era.
GST will require firms to file at least three online tax returns monthly into the GST Network, a massive IT back-end that will process up to 5 billion invoices a month, Reuters said in its report.
The compliance burden and the tax's complex structure -- has four main rates ranging from 5 to 28 percent -- have sparked fears of initial chaos.
In particular, businesses worry that they will struggle to reconcile invoices, blocking the flow of tax credits down supply chains, forcing them to commit time and effort to resolving disputes and reworking budgets, the report said.
A GST Council that brings together the federal and state governments has met 16 times to thrash out how the tax will work. It will meet again on Sunday, Reuters said.
Towards uniform taxation
"Many other countries had got VAT or GST quite early, but we started only in 2005. In India, we are now going to implement a single value-added tax across the value chain, which is a single tax levied by the Centre as well as the state governments. So you must have heard terms such as CGST, SGST — Central GST and State GST. Why are there two different nomenclatures? It is only to denote that some portion of it will go to the Centre, some to the state government. As far as the consumer is concerned, it is a single GST — the same rate on a single product anywhere in the country," Adhia told the Indian Express in a recent interview.
Adhia has been at the forefront of creating awareness about the GST regime, touring states across the country and interacting with the industry. While he concedes there will be difficulties and problems after the rollout, he has said that the government is trying to ensure that every single loose end is tightened ahead of the GST launch.
If a product attracts 18 percent tax, it will be the same rate of tax across the country. This will be divided between states and the Centre. So, 18 percent may be put in the bill as 9 percent State GST (SGST), 9 percent Central GST (CGST), and they are not two different taxes.
-- Hasmukh Adhia, revenue secretary with the Finance Ministry
"But unlike most other countries, where there is only one government collecting GST and then giving it to state governments, in our country we have a dual GST, in which the state governments want to keep separate control; they want to know how much of goods and services are consumed in their state and they want to keep a control on that number," Adhia said.
The multi-rate structure of the GST exempts or imposes a low rate of tax on essential items, while the top rate of 28 percent applies to items such as consumer durables.
Adhia said the GST would be reviewed on an ongoing basis, adding that he would like to see the top rate reduced in future.
