Incoming: India’s sales tax

Incoming: India’s sales tax

India is closing in on its most significant tax reform since independence: a unified national sales tax. Prime Minister Modi’s

Photo: Reuters

Photo: Reuters

India is closing in on its most significant tax reform since independence: a unified national sales tax. Prime Minister Modi’s government has made the introduction of the GST a key economic reform policy; it’s adamant that the landmark scheme be implemented by July 1. To make this happen, a council will meet on Thursday to finalise two pieces of enabling legislation which are to be presented to parliament in the coming weeks.

A GST would do away with India’s complex web of federal and state taxes, replacing them with a single, simplified levy. This is expected to make it easier for businesses to operate across the country’s 36 regions (a notoriously bureaucratic task) and transform Asia’s third largest economy into a single market for the first time.

To enact the historic reform, the federal government must work in tandem with India’s powerful regional authorities, which will be central to the tax’s collection. With 29 states and seven territories, this is no mean feat.

Much work is yet to be done – including circumventing an obstructive upper house. A positive outcome from Thursday’s council meeting is key if the Modi government is to stick to its July 1 target.