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India's Finance Minister, Arun Jaitley, says that India is likely to have its Goods and Services Tax (GST) regime in place by July, after approval from the GST Council of federal-level legislation.
The GST Council, comprising states and centre representatives, approved legislation for the Central GST. It has yet to sign off on the state-level component, which would tax transactions between states.
The legislation will now go to Parliament, which is due to debate the legislation beginning next week.
In another new development at the Council meeting, negotiators confirmed a five percent rate for small hotels and restaurants.
Under the GST proposals, the various elements of the existing indirect tax regime in India will be replaced by a comprehensive dual-GST system, with Central GST and State GST to be levied concurrently by the center (federal Government) and the states, respectively. The centrally levied indirect taxes that would be replaced by the GST include CENVAT, the central excise duty, services tax, customs duties, and any related surcharges. State-levied taxes that would be subsumed by the GST include VAT, sales taxes, entertainment and gambling taxes, the luxury tax, certain entry taxes, and related state surcharges.
India had planned to have GST in place from April 2017 but given delays to the passage of the crucial legislation to amend the constitution late last year, an announcement earlier that India would defer the start date did not come as a surprise. However observers had expected another delay, beyond July 1, 2017.
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