New Delhi: Parliament approved India’s biggest overhaul of
indirect taxes on Monday after the Lok Sabha ratified a constitutional
amendment Prime Minister Narendra Modi called a major step to make doing
business easier.
The proposed goods and services tax
(GST) is one of the most significant reforms since India opened its economy 25
years ago and the revamping of the tax system since the country's independence
in 1947.
The measure will harmonize a mosaic
of state and central levies into a national sales tax, creating a single
customs union widely expected to reduce business transaction costs, with
potentially significant long-term growth benefits.
The Rajya Sabha, where the measure
was stuck for months, passed the bill last week.
It has been 13 years since the tax
was first mooted, but forging a political consensus has been a bruising
process, as the measure would curb the powers of Indian states. Ironically, the
GST is getting closer to the finish line under Modi, who while running the
state of Gujarat vehemently opposed it — a fact that drew criticism from
opposition benches.
Under the new regime, companies will
get offsets for taxes paid at different stages of the supply chain, mitigating
the dangers of double-taxation.
The finance ministry aims to roll out
the GST from next April. Meeting the self-imposed deadline, however, will be a
race against time, tax experts say. The bill now needs the approval of half of
India's state legislatures and central and state legislatures must pass three
laws to implement the tax.
No comments:
Post a Comment