Govt likely to implement GST by mid-2015

The government is likely to implement proposed new indirect tax regime Goods and Services taxes (GST) by mid-2015. With an aim to provide impetus to Indian industry by implementing GST, Finance Ministry has started a comprehensive study of tax exemptions granted to various goods and services under indirect tax regime in order to streamline the tax structure under GST.

The government may implement two types of GSTs including central GST and state GST. However, states are opposing the two tier structure and above constitutional amendment to transfer of taxation rights from state to centre under a uniform structure. States have also proposed to keep products such as petroleum, tobacco and alcohol out of GST ambit.

GST, the proposed new indirect tax regime and one of the biggest taxation reforms in India will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT) and will integrate State economies and boost overall growth. GST will help create a pan-Indian market for movement of goods and delivery of services and add about 1-2 percent to country's GDP. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. The industry is awaiting its introduction, as GST would remove the cascading effect, boost revenues and aid economic growth.