The much awaited Goods and Services Tax Bill (GST) seems to be moving closer to a resolution with news filtering today that the President of India, Pranab Mukherjee has signed the bill into a law.
The government wants to roll out the GST, which the BJP-led ruling party is calling the biggest tax reform that the country will witness since independence, by April 1, 2017. It has been an uphill tax for the BJP to pass the GST with a number of roadblocks in both houses of parilament.
The bill was finally passed after some compromises by the central government as it sought to bring the states around to the idea of a single tax regime.
The GST, when it comes to affect, will subsume other indirect taxes like Central Sales Tax (CST), VAT and Octroi, and bring India under a unified, tax regime. This will be of enormous benefit to sectors like e-commerce as it will lower the cost of moving goods across state borders. It is also assumed that the implementation of GST will lead to a 2 per cent rise inindia's GDP.
Of course, there is still the fact that there is no infomration about the rate of GST that will be decided, which has been a bone of contention between the center and states for some time. The GST council, which is a body created of representatives of states and the central government is now expected to make this key decision.
According to tax analysts we spoke with, a rate of 15-16 per cent seems likely.