GST implementation delay may hurt NDA 2019 poll prospects: CLSA

Sidhartha Shuklamoneycontrol.comBeing the biggest tax reform since independence, the goods and services tax (GST) bill is likely to be passed in this Parliamentary session but experts have emphasized that the implementation of the same will be the key.

Read more: GST a significant move, but implementation is key: India Inc

As per a CLSA report, further delay with the GST roll-out to April 2018 could hurt the political interests of the government ahead of the next general elections in April 19, given the "potential inflationary impact and business community related political issues."Countries which have implemented GST have seen a spurt in inflation in the initial months of the new tax.The inflationary impact of GST in 2018-19 will stay fresh in the minds of the general public, which could develop a negative sentiment towards the now ruling NDA, just before the general elections in April, 2019.

Even after the Bill gets cleared in the Rajya Sabha, it needs to be passed by 50 percent of the state assemblies."States would need to enact their own GST laws; the flexibility that states will have to change tax rates would be the key detail to watch out for," says the CLSA note, adding , "formulation of several details on GST implementation (rules, etc) could be time consuming."In an interview with CNBC-TV18, Tushar Pradhan of HSBC Global Asset Management points out that the real impact of GST on corporate earnings will not be visible for at least a year or two.

On the fiscal front the impact of GST leading to a significant increase in revenue is going to take even longer, he added.

The GST Bill is bound to cause upheaval the short-term, its long-term gains will be realized in the years to come but whether the ruling party benefits from the implementation in the next general elections or not remains a vital question.Follow @shukla_05sid