India GST implementation delayed past April 2012 deadline

2 December 2011

Following discussions between local State representatives, it appears likely that India will miss the planned deadline for the implementation of GST – replacing VAT and other taxes– set for April 2012.

India currently operates a complex system of national and local taxes.  The central government levies: CENVAT, VAT and Service Tax.  The local State charges a sales/consumption taxes (VAT).  Many of these taxes overlap and impose heavy bureaucratic burdens on companies.  In particular, businesses trading across State borders may be subject to double taxation.

The key issue to imposing the new, simplified Goods and Services Tax (GST) is agreeing on a formula to satisfy all States following the withdrawal of local taxes.  Current discussions indicate that no resolution is near, and so the April deadline will be missed.  The target date for the national introduction of GST has been postponed several times in recent years.

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