The government is set to miss the deadline for tabling supporting legislation for the goods and services (GST) tax in the ongoing winter session of Parliament after the GST council on Sunday failed to finalize the draft laws.

This in turn puts the government’s 1 April deadline of rolling out GST under a cloud.

The government wanted to table three draft laws—the central GST bill (CGST), the integrated GST bill (IGST) and the bill for compensating states for revenue losses following the implementation of GST (SGST)—in the winter session ending on 16 December.

But these bills are now likely to be tabled only in the budget session, due to begin in January, as the GST council failed to reach a consensus on any of the bills.

State legislatures also have to pass the state GST bill before the tax can be rolled out, making it even more difficult for the government to push through GST implementation from the beginning of the next fiscal year.

Finance minister Arun Jaitley reiterated that the government is still aiming to meet the 1 April deadline and will evaluate its options once the GST council gives its nod to all three bills.

“The target is 1 April. We stand by our target. The luxury of time is not available to us. The last day to implement GST is also constitutionally defined. Discretion of when to implement GST is only five months and 16 days—that is between 1 April and 16 September (2017)," he said at a press conference after the sixth meeting of the GST council on Sunday.

All existing indirect tax laws of the centre and the states will be void from 16 September 2017—a year after the Constitution amendment for GST was notified in the official gazette.

Kerala finance minister Thomas Isaac was sceptical about meeting the deadline: “1 April is not possible. It is likely to be rolled out only from September."

GST is a singular tax reform that will remove barriers across states and integrate the country into a common market.

The meeting of the GST council, which was initially scheduled for two days, ended a day earlier on Sunday, after discussing many sections of the CGST and the SGST bills. Jaitley said substantial headway was made in finalizing the CGST and SGST draft laws with both sides managing to lock down many provisions.

The next meeting will take place on 22 and 23 December which will continue with the discussions on the CGST and SGST bills (including one clause on coercive powers that will be redrafted) and then take up the more controversial integrated GST bill where the contentious issue of sharing of administrative powers between the centre and the states will again come up.

Jaitley said the government has various options ready for discussion on the issue of sharing of administrative powers.

The issue of dual control has been long pending between the centre and the states.

While some states like West Bengal, Kerala and Tamil Nadu are demanding exclusive control over all traders who have an annual revenue threshold of less than Rs1.5 crore, the centre is unwilling to yield to this demand as it will leave a very small pool of traders under its control.

The central government instead favours dividing traders in a fixed proportion between the centre and the states irrespective of a threshold. Another option being considered is only dividing the traders who are likely to be audited in a GST regime.

It is unfortunate that the GST council was unable to make much headway, said Pratik Jain, partner and leader, indirect tax, at PwC.

“The only silver lining was that substantial progress seems to have been made on discussions with respect to laws and broad consensus was reached for provisions up to Chapter 20 (out of total 27 chapters)," he said in a note. “Having missed the winter session, one would hope that Centre and States would be able to work together to make it happen in the Budget session. 1 April 2017 seems a stretched target now and a minimum of three months delay looks quite imminent," he added.

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