Mumbai: Equity benchmarks ended flat with a positive bias after a consolidation on Thursday as investors digested the passage of a long-awaited Goods & Services Tax (GST) Bill. It adds to the appeal of a nation that Goldman Sachs Group Inc.in June called “one of the world’s most compelling” consumer stories for the next two decades.
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“There was a public anxiety, nearly an exasperation, over the delay”, he said.
National Association of Software and Services Companies (NASSCOM) welcomes the government’s initiative to bring in structural changes to the tax regime in India through the Goods and Services Tax (GST) bill.
The Constitution Amendment Bill had been approved by the Lok Sabha in May past year but the amendments made to it by the Rajya Sabha would mean the legislation would again travel to the Lower House before going to states assemblies. “Pushing this through will provide a major boost to the credibility of the reform process in India”.
“It integrates India into one economic entity…” Members of a regional party in the southern state of Tamil Nadu, which fears losing tax revenue, abstained from the final vote.
Currently, a multitude of different charges are imposed on all goods and services sold in India, with each state setting their own rates. The simplicity and certainty that it offered needs to be emulated in the GST law that States and Centre adopt subsequently.
About 150 countries worldwide have some form of GST or VAT (Value Added Tax), according to the Organization for Economic Cooperation and Development. “And as compliance increases, the possibility of that rate coming down further would be there”, he said. Moreover, the simplification of the tax system will reduce corporates’ and the government’s tax administration costs.
“A single tax structure improves the ease of doing business and creates a level playing field for local companies in export markets”, he said. He held multiple rounds of talks with his predecessor and Deputy Leader of Opposition and senior Congress leader Anand Sharma, even deputing Revenue Secretary Hasmukh Adhia and Chief Economic Adviser Arvind Subramanian for the technical discussions.
Nonetheless, India is now on track to move forward with a reform that had been delayed for years due to political bickering. The main opposition Congress party, which first proposed the GST in 2006, had blocked the measure in the upper house in part because Modi also obstructed it as leader of Gujarat state before he became prime minister.
Modi secured a breakthrough after recent state elections strengthened political parties that supported GST, altering the balance of power in the upper house.
The money collected would go to the state where a product is consumed, not where it is produced.
“The Congress was in favour of the bill (that was passed unanimously by the Rajya Sabha on Wednesday)”, the Chief Minister told reporters here. “But there can never be a ideal bill”.
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Jaitley has said he hopes it will be in place by April 2017, although many experts believe this is optimistic.
