INDIA HAS HUGE GST CHALLENGES
New system, slated to be effective July 1, will replace at least 17 state and federal levies
MUMBAI battle to win over the country’s powerful states and fractious federal parties.
Designed to free up trade, foster tax compliance and make it easier to do business in the world’s fastest growing major economy, the GST is scheduled to go into effect on July 1.
“It has been a huge challenge with countless man hours,” said PricewaterhouseCoopers LLP indirect taxes partner Anita Rastogi.
“The July 1 target is looking feasible. And the effort that has been put in is worth it because this will lead to greater tax compliance and better efficiency.”
Until now, a product or service in India is taxed multiple times at different rates as components are added and shipped between states. Everyday more than 20,000 truck drivers wait in queues up to 3km long to pay an
Australia, with a population of 24 million people and a land mass larger than India, relies on foreign investment to spur growth. While Prime Minister Malcolm Turnbull’s government blocked two key purchases by Chinese firms last year, citing national security, the report showed that the vast majority of deals were approved.
“There are signs of a growing maturity by Chinese investors in the Australian market,” said the report in its key findings. entry fee at 122 New Delhi checkpoints, food rotting, tempers fraying, costs rising.
The new levy will apply at the final point of consumption, reducing the cascading effect of taxes on tax, allowing producers to easily claim credits and minimising the opportunity for corruption. Those trucks at the New Delhi border? They’ll see their waiting time at check points drop by half, according to economists at Nomura Holdings Inc.
Prime Minister Narendra Modi’s government said introduction of the tax might bolster growth by as much as two percentage
“The number of joint ventures is increasing with more repeat investments by established Chinese firms. This has set a foundation for growth in future investment.”
Commercial real estate remained the largest sector, attracting 36 per cent of Chinese investment, followed by infrastructure with a record 28 per cent including the purchases of Asciano Ltd and the Port of Melbourne, according to the report. Bloomberg points.
Finance Minister Arun Jaitley said the tax reform could see India grow at more than eight per cent while a recent research paper from the United States Federal Reserve said the change could boost real gross domestic product by as much as 4.2 per cent, depending on how high the tax rates are. The lower the rates, the bigger the boost, said the paper.
A GST for India will in effect create one of the world’s biggest free trade areas. Its population of 1.3 billion is more than that of the US, Europe, Canada and Australia combined and more states than the European Union’s 28 members.
The tax will replace at least 17 state and federal levies on everything from electricity to Gucci handbags to border crossings. The GST will sweep those away and harmonise the indirect tax system across the nation.
India’s tax will comprise four basic rates: five, 12, 18 and 28 per cent. While officials are yet to reveal final details of what will fall into each bracket, Finance Minister Arun Jaitley said 50 per cent of items in the retail inflation basket won’t be taxed to protect consumers. Bloomberg