GST roll out likely to be deferred to 1 April 2011

The UPA government's proposed comprehensive indirect tax reform, goods and services tax (GST), will likely not roll out from 1April due to a temporary setback to the creation of a unified national market for goods and services in the country. However, according to experts, this would offer more time to the centre and states to prepare a more robust framework.

According to Asim Dasgupta chairman of the empowered committee of state finance ministers and West Bengal finance minister, it would not be practical to introduce GST on 1 April, 2010 due to the difficulties in passing the required constitutional amendment bill in the budget session. He was speaking to reporters after an hour-long meeting of the panel with the union finance minister Pranab Mukherjee on Thursday.

The GST, which is a consumption tax, is aimed at creation of a seamless pan-India market with both manufacturers and service providers given the right to adjust taxes paid on inputs sourced from another state.

Finance minister Pranab Mukherjee, had in October, at a summit in the capital, indicated possibility of a few months' delay in implementation of the proposed tax, but had later said the efforts were on to keep the schedule. 

According to analysts, Dasgupta's admission was a clear indication that the implementation of the new regime might be delayed by a year to 1 April, 2011 as a number of states might not be willing for even a mid-year roll-out. 

Even tax experts agreed that it was much better to delay the launch and come out with a good product that to push a patchwork product. According to R Muralidharan, this would give time to prepare a flawless model.