India’s lower parliament passes long-awaited tax reform

India’s lower house of parliament Wednesday passed a tax reform bill intended to transform the country into a “seamless” market, boosting economic growth and cutting the cost of doing business.

 


 


New Delhi — India’s lower house of parliament Wednesday passed a tax reform bill intended to transform the country into a “seamless” market, boosting economic growth and cutting the cost of doing business.



But the goods and services tax (GST) bill must now be passed by the upper house, where Prime Minister Narenda Modi has been struggling to pass his reforms since storming to power a year ago on a pledge to revive the economy.



Finance Minister Arun Jaitley urged parliament to support the long-awaited bill, saying it would transform India into a common market and end multiple taxes and levies on products across the country.



“The GST would ensure a seamless and uniform indirect tax regime besides lowering inflation and promoting fresh growth,” Jaitley told parliament.



The government is hoping to introduce the GST from April 1, 2016. But the reform still faces hurdles including approval by more than half of India’s 29 states and territories, some of which object to giving up their own right to levy taxes.



Modi’s efforts to introduce a string of economic reforms have been frustrated by parliament where his Bharatiya Janata Party (BJP) lacks a majority in the upper house.



With two days left before the current session ends, the government looks unlikely to pass another key bill making it easier for businesses to buy land for development projects.



The GST would end India’s patchwork of taxes, under which each state has used its powers under the constitution to tax different commodities at different rates.



The opposition Congress party, which also attempted to introduce a GST while in power, boycotted the vote on Wednesday. It said the bill, which requires a change to the constitution, should first be sent to a committee. — AFP