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IMF Welcomes India's Progress Towards GST Adoption

by Mary Swire, Tax-News.com, Hong Kong

11 May 2015


The International Monetary Fund (IMF) has welcomed approval by India's lower house of Parliament of legislation that clears a key legal hurdle blocking the introduction of a goods and services tax (GST) in India.

During a press briefing on May 7, 2015 – a day after its decision – the Director of the IMF's Asia and Pacific Department, Changyong Rhee, said that the GST is one of the key elements for long-term sustainable growth in India.

Under the GST proposals, the various elements of the existing indirect tax regime (including the VAT itself) will be replaced by a comprehensive dual-GST system from April 1, 2016, with Central GST and State GST to be levied concurrently by the center (federal Government) and the states, respectively.

Rhee said that the bill is one of the most important elements of Prime Minister Narendra Modi's reform agenda. However, he also said that questions remain over how the Government will roll out the tax at state level.

Optimistic about its adoption, the IMF has factored the introduction of GST into its 7.5 percent 2016 gross domestic product (GDP) growth forecast for India, Rhee said.

TAGS: tax | economics | value added tax (VAT) | India | fiscal policy | gross domestic product (GDP) | International Monetary Fund (IMF) | goods and services tax (GST) | legislation | tax reform | services

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