Sweeping tax reforms introduced by India GST
Numerous federal and state taxes in India have been replaced with the Goods and Services Tax, the design has been implemented to unify the country into a single market.
The overhaul of tax legislation which is being considered historic was carried out at a special midnight session of the parliament. India has said that introducing GST will cut red tape and increase the tax revenues, which will fuel economic growth. Arun Jaitley the finance minister has said that the reform will help the economy grow by 2%.
However businesses on the other hand have been asking for more time to implement changes, they have been worried that they are not ready for the move to the new system. Issues such as the fact that many do not even have a computer to register on the GST network have arisen.
Harishankar Subramanian, of Ernst and Young had said “No country of comparable size and complexity has attempted a tax reform of this scale”
Under the new system, goods and services will be taxed under four basic rates – 5%, 12% 18% and 28%.
Some items like vegetables and milk have been exempted from GST, but will still be subject to existing taxes.
The price of most goods and services are expected to increase in the immediate aftermath of the tax.
Analysts expect economic growth to slow down over the next few months, but say it should pick up after the tax is fully implemented.
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