India deadlock on GST rate

Sat 2nd Apr 2016

Negotiations for the implementation of the new Goods & Services regime in India remain in deadlock.

The opposition Congress party remains adamant that the ruling BJP party must commit to a headline GST rate of below 20%.

The reform of the existing plethora of VAT, Service Tax, CENVAT and other indirect taxes is seen as crucial to help India boost its internal markets. The current regimes are overly complex, and deter intra-state goods trading due to double taxation.  The original blueprint for the new regime was proposed in 2003, but the two leading parties have failed to agree on the details ever since.

It has been estimated that the imposition of GST, based on a standard OECD model, could lead to up to 2% rise in annual GDP growth for India.