India lower house approves GST reform
- May 5, 2015 | Richard Asquith
The lower house of the Indian Parliament, the Lok Sabha, today approved the Constitutional Amendment Bill to introduce a Goods & Services Tax (GST) Indian regime.
GST will replace a myriad of consumptions taxes, including: VAT; CENVAT; Service Tax; and Professional Tax. These are highly complex to comply with, and often overlap causing a large degree of double taxation. This hampers the development of India’s free, internal market that is viewed as a major constraint to growth. It has been estimated that a fully functioning VAT-like tax in India, based on the OECD recommended model, could boost annual growth in India by up to 2% per annum. Chinese VAT is undergoing a similar reform to great success.
The Indian Bill will next go to the upper house for approval. It then must be agreed to by a majority of the Indian States. It is still hoped that the implementation date will by 1 April 2016.