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India Delays GST

by Lorys Charalambous,, Cyprus

16 December 2010

Indian Finance Minister Pranab Mukherjee has indicated that the central government is prepared to delay the roll out of the much troubled national goods and services tax (GST) by another year while a consensus is sought on the issue with state-level governments.

Addressing a two-day GST seminar, Mukherjee said that the central government has "revised" its position on the implementation of the tax in order to "accommodate the concerns of the state governments."

Mukherjee revealed that the centre is considering a phased introduction of GST, but he reiterated that the ultimate aim of the reform is for a uniform GST rate to apply across India.

The central government is now targeting April 2012 for the roll out of the GST, alongside the introduction of the new Direct Tax Code.

The national GST was first scheduled to be introduced in April 2010, but has had to be postponed several times due to the complexity of the reforms and continued opposition from state governments. In the 2010-11 budget it was announced that the national GST would be rolled out in April 2011. A three-tier rate structure has been proposed: 20% on goods; 16% on services; and 12% on basic items.

The central government has already conceded many points to accommodate state objections, including waiving its right to veto rate-setting proposals agreed by a consensus of states and the centre, and guaranteeing to make up losses of revenue experienced by individual states.

TAGS: tax | India | budget | goods and services tax (GST) | tax rates | services

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