New tax on goods: the economy will grow by 2%
The upper house of parliament yesterday approved the "Goods and Services Tax". The law simplifies the intricate Indian tax system, which varies from state to state. With a single tax on the entire territory domestic trade will be encouraged and exports will be more competitive.
New Delhi (AsiaNews / Agencies) - The Indian Parliament has approved a law on the single tax on goods and services. The vote was hailed as one of the most important since the unification of the country, given that the legislation will simplify the complex tax system in force in 29 States and Union Territories.
Economic projections indicate that simplification will allow a further increase of 2% of the economy. If confirmed, this result would cause a great leap forward for one of the most vibrant economies in the world, which has already overtaken China.
The "Goods and Services Tax" (GST) law was approved yesterday by the Rajya Sabha, the upper house of India. It was proposed for the first time in 2006 by the then Minister of Finance, but has had a decisive push under the administration of Prime Minister Narendra Modi.
The new tax will replace the present complicated tax system which dates to 1950 and regulates the passage of goods between states. So far each state could impose autonomous taxation, creating a Babel of taxes that slowed the economic flow and made exports difficult.
But now a single market has been created, which will make trade between 7.5 million companies that serve a population of nearly 1.3 billion easier. The government hopes to implement the GST from April 1, 2017, the beginning of the new fiscal year. The law now has to be approved by at least 15 States and the common tax rate agreed upon and established throughout the territory. A group of experts commissioned by the government suggests between 17 and 18%.