India Releases Good and Service Tax Proposal

November 11, 2009 Taxation in India  No comments

The outlines of India’s Good and Service Tax (GST) plans are starting to emerge, with the first discussion paper on the idea being released on November 11th.

The initial details concerning the structure of India’s upcoming GST implementation have been released by the Empowered Group of State Finance Minister. Though the paper is not a complete account of every aspect of the new GST system, it is the first comprehensive discussion to both its format and implementation.

The group has stated that the new GST system will have two components: Central GST and State GST, both of which will be levied concurrently. Further, there will be two rates set for the GST: a lower rate for items that are deemed necessary, and a standard rate for those that are considered to be general goods. The discussion paper did not propose rates for any component of the GST. Slews of India’s current state and central taxes will be subsumed under the GST proposal, these include Value Added Tax (VAT), service tax, entertainment tax, luxury tax, excise and customs duties, amongst others.

The GST is scheduled to be implemented on April 1st 2010, though the lack of final details in the plan and uncertainty from Indian states is shedding some doubt on this proposal. Asim Dasgupta, West Bengal finance minister and Chairman of the Empowered Group of State Finance Minister, has said that it will probably not be until December that he is able to comment on whether the current GST implementation will be adhered to. Further, Asim Dasgupta has said that there are still inter-state disagreements and IT issues to resolve before further progress can be made.

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