Economy

India Aims for Swift GST Implementation, Official Calls 18 Percent Rate Discussion ‘Premature’

NEW DELHI – India aims to implement a new Goods and Services Tax (GST) by April 2017, according to a senior finance ministry official, following the passage of a crucial constitutional amendment in parliament’s upper house.

Revenue Secretary Hasmukh Adhia stated that his goal is to secure ratification of the constitutional change by the required majority of states within the next 30 days. This will enable the formation of a new GST Council to finalize legislation regarding rates and other aspects of the tax.

During a news conference, Adhia noted that it would be "premature" to anticipate a standard GST rate of 18 percent, as suggested by the chief economic adviser to the government, as such a rate could result in significant revenue losses. Currently, most revenue is derived from excise duty and value-added tax, which together impose a tax burden of 27 percent on businesses selling goods.

"Revenue neutrality has to be maintained," Adhia emphasized to reporters.

If everything proceeds as planned, this would mark the most significant tax reform since India’s independence, transforming its $2 trillion economy and its market of 1.3 billion people into a unified market for the first time, potentially yielding substantial long-term growth benefits.

However, tax experts caution that establishing a new IT system, training tens of thousands of tax officials, and informing companies about the changes could delay the launch date by as much as six months.

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