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India Approves Single-Tax Scheme
India’s parliament has passed a new Goods and Services Tax intended to replace the country fragmented tax structure with a single tax rate.
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India’s parliament has passed a new Goods and Services Tax intended to replace the country fragmented tax structure with a single tax rate.
The measure now awaits approval by at least half of India’s 29 states, BBC News reports. The government optimistically targets a GST implementation date of April 2017. Officials also must set the actual tax rate. A government review board suggests a levy between 17% and 18%.
Backers predict the GST will boost economic growth in India by 2%. Skeptics consider approval unlikely.
India’s fragmented tax system allows each state to impose its own array of taxes, resulting in multiple fees on goods shipped across the country. Attempting to track such tax payments has resulted in a complex and inefficient bureaucracy, says BBC.
The new tax would affect some 7.5 million businesses, most of which have been pushing for a single-tax alternative. The GST would compensate states for lost revenue for five years. In the meantime, the measure exempts fuel and alcohol for the new tax scheme.
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