India GST setback puts April 2016 start in doubt
Plans to introduce an Indian Goods & Services Tax suffered a set-back on 12 May 2015.
The rejection of the Constitutional Amendment Bill by the upper Parliamentary House, the Rajya Sabha, comes less than a week after the lower house approved the GST bill. The ruling BJP’s minority position in the house was not enough to secure the passage of the Bill.
The Bill will now be referred to house committee. It had been hoped that this stage of the parliamentary procedure could be avoided given the heavy scrutiny the Bill has already received. If the new review is short, then the implementation date of 1 April 2016 may still be met.
GST replaces Indian VAT, CENVAT taxes
The new GST regime, based on the OECD’s recommended system, will do away with a number of overlapping and complex consumption taxes, including: VAT, CENVAT, Professional Tax and Service Tax. It has been estimated that the new tax could boost Indian GDP by 2% per annum as it reduces the instances of double taxation and length compliance requirements.