GST delayed further as states get more time to switch to common rate

26 December 2014

The final shape of the proposed goods and services tax (GST) in the country will be an uneven one with some states likely getting up to a year more to join the GST regime after its introduction on 1 April 2016.

The centre may also allow states to unilaterally alter with state-level GST rates in order to get more states agree on the proposed dual-GST system in the country.

In the GST architecture proposed during the UPA regime, the centre was to decide on the rates in consultation with states.

The revised draft prescribes a transitional clause in the Constitution Amendment Bill, introduced in the Lok Sabha last Friday.

The main issue that held up the GST during the UPA regime was that the states had to follow the rates set by the centre's GST Council and there was no room to deviate from them.

The new government in Delhi is looking to implement a dual-GST system, where the centre will impose a central GST (CGST) and the states will impose a state GST (SGST).

The proposed flexibility for states to tinker with SGST rates could stretch a consensus on the GST implementation front and there is a danger of the differences in rates widening with financial needs of individual states.

Over 150 countries have switched over to the GST regime.

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