India GST Update: States, Rates and 60,000 Trainees

Numbers feature prominently in the narratives describing India’s massive tax reform. The country’s adoption of a completely new, highly streamlined and much anticipated Goods and Services Tax (GST) features some compelling data points, including these:

• 2 percent: That’s the boost to the country’s economic growth rate that the new indirect tax system is projected to deliver to India within a few years, according to Indian Minister of Finance Arun Jaitley.
• 4 slabs: This is how many different levels of tax rates the GST contains: 5 percent, 12 percent, 18 percent and a rate not exceeding 40 percent. Previously, the peak rate was set at 28 percent, but now the act has been amended to reflect a cap of 40 percent to allow for future rate increases. This is just to ensure that any future increases need not go through the Parliamentary process. However, there are also exemptions – goods that will not be taxed at all, such as fruits, vegetables and other essential commodities; and a handful of notable items (alcohol and gasoline among a few others) whose existing taxes will remain unchanged and not subject to the GST. In addition, certain demerit goods will be subject to the GST Compensation Cess which will be imposed in addition to the GST and will be capped at 15 percent.
• 60,000 trainees: The GST Network (GSTN) is a public-private not for profit private limited company consisting of 70-plus experts responsible for administering GST for India’s tax authorities. This organization’s daunting mandate includes providing the technology infrastructure and training necessary to facilitate the massive numbers of GST registrations, returns submissions, refund applications, payments and settlements that will take place within the new tax system. The GSTN leadership team recently reported that it plans to train 60,000 state and Centre tax officers on using its portal to support registration approvals, assessments, audits and settlements.

GST continues to appear on track for a July 1 implementation. Indian President Pranab Mukherjee recently completed his review and accorded approval for all the federal GST legislative bills. These bills have become laws, which will be implemented according to the government, which recently reaffirmed (but has yet to finalize) its intention of a July 1 rollout date. India’s states have begun organizing the special legislative assembly sessions that need to take place to pass the state GST bills into law. Please note that the state of Jammu and Kashmir will not be subject to the GST.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.