India’s opposition, the Congress party, continues to block the passage of the Goods and Services Tax (GST) bill. India plans GST implementation from October 2017.
GST will replace a range of indirect taxes, including: CENVAT; VAT; Professional Tax; and Service Tax. Many of these taxes overlap, are complex and expensive to comply with and result in double taxation on the movement of goods across internal state borders. Aside from a crippling burden on companies, it is a disincentive to India’s manufacturers and internal market.
GST would sweep away these issues, and, it is claimed, lead to a rise of 1.5% to 2% in annual GDP.
However, Congress, which designed the original GST reform bill when in government, is blocking the passage of the GST plan over two issues:
- A cap on the national GST rate of 18%
- The creation of an independent judge to resolve intra-state tax sharing disputes
The governing BJP party is looking for the passage of the bill this autumn, and implementation in early 2017. The GST reform plan was drawn up over 10 years ago, and has missed many deadlines for its introduction.