India Implements Key Adjustments to Advance Stalled Tax Reform, Reports Reuters

The Indian government has made significant changes to its goods and services tax bill, aiming to garner support from opposition parties and state governments.

This proposed tax reform, the most significant since India’s independence in 1947, aims to consolidate various federal taxes and levies across 29 states, effectively turning the country into a customs union for its population of nearly 1.3 billion.

Experts believe that the implementation of the goods and services tax (GST) could enhance India’s economic growth by up to 2 percentage points.

The government has eliminated a controversial 1 percent extra charge on the movement of goods between states and has committed to compensating states for any potential revenue losses over the next five years.

Although there is broad political backing for this reform, disagreements remain over specific details, particularly regarding the appropriate tax rate to mitigate possible revenue deficits.

Indian Finance Minister Arun Jaitley recently met with state officials to build a political consensus around the bill, which has faced delays in parliament.