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India Considers Simplifying Sales Tax


 Can India simplify its complicated sales tax?

What’s a bureaucrat to do?

Most of us have been at the mercy of a bureaucrat at some point in our lives. In India, truck drivers find themselves in that position every time they cross the border between states; they must show that the proper taxes have been paid on what they’re carrying.

The Wall Street Journal reports that officials “delay shipments and snarl companies in red tape.” They do this because of a “complicated web of sales taxes” that is the result of the following:

  • Indian states each take a different approach to taxing merchandise.
  • The federal government imposes taxes on services and manufactured products.
  • Interstate sales are subject to an altogether separate levy.

No wonder trucks spend close to “a quarter of their time on the road in border checks or other official inspections.”

The government of Prime Minister Narenda Modi has introduced a constitutional amendment “to clear the way for the GST (general sales tax). Half of India’s states (there are 29) and two-thirds of Parliament must approve it. And although the change has the support of Finance Minister Arun Jaitley, numerous business owners, and truckers, it is not universally embraced. Particularly concerned are officials in states with large manufacturing bases—the change would cause tax revenue to “go to states where goods and services are consumed, not where they’re produced.”

Read the full story in the Wall Street Journal.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.