India launches tax revolution amid business doubts
NEW DELHI: India yesterday launched its biggest ever fiscal reform with the government promising that a new nationwide tax would make the economy stronger and less corrupt, but businesses are nervous about the revolution.
The new goods and services tax (GST) replaces more than a dozen levies imposed nationally and by the 29 states. It aims to transform the nation of 1.3 billion people and its US$2 trillion economy into a single market.
Prime Minister Narendra Modi held a special midnight session of parliament to launch GST which he called “a good and simple tax”.
“With GST, the dream of one India, great India, will come true,” the prime minister said.
“GST is a simple, transparent system which prevents generation of black money and curbs corruption,” said Modi who jolted the country last year by withdrawing more than 85 per cent of India’s bank notes from circulation in a clampdown on under-the-table dealings.
But the prime minister, who has put huge efforts into the economy as he targets reelection in 2019, acknowledged there would be teething troubles.
Jammu and Kashmir state has refused to sign onto the one tax regime.
GST has sparked protests by traders, while the main opposition Congress Party boycotted the launch ceremony.
Businesses are nervous about GST, which sets out four different rates of between five and 28 per cent instead of the one originally envisioned.
The GST rule book runs to more than 200 pages and lastminute changes were still being made late Friday. — AFP