Indian GST implementation boost with change in opposition

Mon 10th Mar 2014

The opposition BJP chief, Narendra Modi, confirmed last week that he would back the speedy implementation of Indian GST should he win this summer’s national elections.  This is a major boost to attempts to reform the arcane Indian VAT regime.

Indian GST reform

The change in stance comes following extensive talks with industry, tax and accounting authorities.  The commonly shared view is that the GST reform could boost the Indian economy by as much as 2%, which would be vital as the economy has slowed rapidly in recent years and dropped behind China’s explosive growth.  China VAT reform is well underway since 2012.

The principle problems of Indian CENVAT, Service Tax and VAT include double taxation between states on the same transactions, and limited opportunity to recover input Vat suffered.

To date, it has been the local states and the BJP party which has held up the implementation process since 2010, but this change would now mean the political tide will turn following this year’s election.  But the question of an adequate IT infrastructure to support the complex state revenues remains a stumbling block.