Chidambaram against hasty implementation of GST: report

A rush to roll out the Goods and Services Tax (GST) without the fitment of items on various slab rates could be detrimental for proper implementation of the new tax regime, says former finance minister P Chidambaram.

Also, the GST bills are far from perfect and several provisions could call for amendments over the coming two years or so, Chidambaram said, adding that a 1 October deadline for the rollout of GST would be more proper.

A rush to roll out the new tax regime from 1 July could be detrimental and fitment of items holds the key to the success of the new tax regime, he said in an interview with The Indian Express.

In an interview with The Indian Express, Chidambaram said the GST-related bills are ''imperfect'' and could require amendments ''within the next two years''. He, however, said that fitment of goods and services in the tax slabs under GST will hold the key to partly compensate for imperfections in the Bills.

''…it can be made less imperfect if you put 70 per cent of the goods and 70 per cent of the services in the rate of 18 per cent. And, if you manage to push 90 per cent of the goods and 90 per cent of the services in the modal rate of 18 per cent, it becomes even less imperfect,'' he said.

According to Chidambaram it is the multiplicity of rates that is the key imperfection; the others being the compliance provisions, lack of clarity in some provisions and the absence of fitment of items.

The whole thing will unravel if the fitments are done unwisely or with greed – to extract more tax and the fitment gets skewed in favour of higher rate.

He also discounted the applicability of section 171 which deals allegedly with anti-profiteering, saying it's actually a suspect provision from the constitutional point of view as it is be open to abuse.

Also, keeping key inputs such as electricity, real estate, petroleum, which constitute about 40 per cent of GDP, outside GST would be an aberration, he said.

There's an assurance of 14 per cent growth in revenue (for states), which, he said, would put pressure on number of items being brought under the 28 per cent category.