On August 3, the Rajya Sabha or the Upper House of India’s Parliament passed the much discussed and much awaited Goods and Services Tax (GST) bill. Labeled as a landmark tax reform, the Goods and Services Tax will replace a plethora of various state and federal taxes such as VAT, sales tax, luxury tax among others, with one single tax. Additionally there will not be any taxes levied at the different state borders in the country.
GST will be completely technology-based. India’s software corporation Infosys, will build a GST portal, a gigantic electronic infrastructure, which will service 7.5 million businesses where taxpayers can register, make payments and file returns.
The new efficiency aims to boost growth, with optimistic estimates suggesting more than 2% of added economic growth. India already has overtaken China as the world’s fastest growing economy, reports the BBC.
The actual tax will take some time to be decided since at least half of the country’s 29 states will have to approve the bill before it can become law. Then, the actual tax will need to be fixed; A government panel has suggested a rate of 17-18%. The government target for the tax coming into effect is April 2017.