India 2016 GST implementation - new Bill
- 07 October 2014 | Richard Asquith
The Indian Goods & Services Tax (GST) implementation plans took a big step forward last week as a new Bill was published included resolutions to many of the issues that have long-held up the reforms to the existing indirect tax regime.
The Bill includes a target of 2016 for the role out of Indian GST. It has withdrawn a controversial dispute settlement council, which the States feared would give the Central government too much power over the redistribution of taxes in the new regime. There has been a compromise on petrol and alcohol – petrol is to be included but alcohol will be zero rated for GST. It also includes a graduated tax rate for the key commodity of floor. Alcohol will continue to be subject to Indian VAT, Sales Tax and Excise Duty
Indian VAT, Service Tax and CENVAT
Currently, India operates a complex and overlapping VAT, Service Tax, CENVAT and other taxes system. This can lead to a heavy bureaucratic burden on companies, especially on intra-state trade where there is regular double taxation on the same transactions.
Discussions about an overhaul of the regime, and the introduction of GST based on the OECD’s guidelines on global VAT, have long been discussed. It is believed that it could add 1% to 2% to the GDP of the country be improving the economic environment.