GST : The Promised Messiah For The Investors In India

By: Vinoth Poovalingam, 2016-04-05 07:30:00.0Category:  Developments
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Goods & Services Tax (GST), the one tax which is supposed to replace the current Central and State taxes, has always been the promised Messiah to the investors looking to Invest in India. In his latest visit to Saudi, Prime Minister Modi promised the certainty of GST being a reality soon. The reason why this is a huge hook for the investors is very simple, it brings simplicity if not the transparency needed to understand business in India

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The idea of a unified GST was started way back in 2000 when the Vajpayee government tasked a team of Empowered State Finance Ministers to come with a GST model. As with any policies, there were many state governments against it and they abandoned the concept in the year 2005. Since then we have had version of the GST coming out to get the buy-in from all parties involved. With some State or the other crying foul, the GST has always been a pending promise for a business man seeking a simplified and transparent tax structure.

From an Investor standpoint, India being one country the expectation is to treat it like any other country to manufacture and deliver products. But the current model means registration with various states individually and adherence to each of the 36 different laws about selling goods. Now with systems managing the backend work, it seems easy to adhere to all of these but the real challenge is staying on top of what is right where. With a lot of red tape and bureaucracy, the shady areas of inter-state sales and what tax should a corporate pay is a puzzle in itself. The concept of a transparent and simplified tax structure will help in taking the doubt and uncertainty away in a business model in India.

With the ability to GST to improve transparency in the way Indian business is carried out, no wonder this is a powerful hook to foreign investors. The only question which needs more clarity is by when the promise will be full-filled?

The current status of GST is promising if not worse than ever before. The current form of the GST under the Constitution ( 122nd Amendment) Bill has been passed at the Lok Shaba in May 2015. It has been sent for review with the state governments as well. But with the Congress, not in acceptance to the current form of the bill there is a high chance of it being shot down in the Rajya Shaba, where the ruling NDA does not have a clear majority. Even after the acceptance in Rajya Shaba, the legislation should get the acceptance at the state level. With things like Modi’s promise and Jaitley resolve of trying to push the bill again in the parliament session, the promised Messiah may have a fighting chance to see the light finally.

Goods & Services Tax (GST), the one tax which is supposed to replace the current Central and State taxes, has always been the promised Messiah to the investors looking to Invest in India. In his latest visit to Saudi, Prime Minister Modi promised the certainty of GST being a reality soon. The reason why this is a huge hook for the investors is very simple, it brings simplicity if not the transparency needed to understand business in India.

The idea of a unified GST was started way back in 2000 when the Vajpayee government tasked a team of Empowered State Finance Ministers to come with a GST model. As with any policies, there were many state governments against it and they abandoned the concept in the year 2005. Since then we have had version of the GST coming out to get the buy-in from all parties involved. With some State or the other crying foul, the GST has always been a pending promise for a business man seeking a simplified and transparent tax structure.

From an Investor standpoint, India being one country the expectation is to treat it like any other country to manufacture and deliver products. But the current model means registration with various states individually and adherence to each of the 36 different laws about selling goods. Now with systems managing the backend work, it seems easy to adhere to all of these but the real challenge is staying on top of what is right where. With a lot of red tape and bureaucracy, the shady areas of inter-state sales and what tax should a corporate pay is a puzzle in itself. The concept of a transparent and simplified tax structure will help in taking the doubt and uncertainty away in a business model in India.

With the ability to GST to improve transparency in the way Indian business is carried out, no wonder this is a powerful hook to foreign investors. The only question which needs more clarity is by when the promise will be full-filled?

The current status of GST is promising if not worse than ever before. The current form of the GST under the Constitution ( 122nd Amendment) Bill has been passed at the Lok Shaba in May 2015. It has been sent for review with the state governments as well. But with the Congress, not in acceptance to the current form of the bill there is a high chance of it being shot down in the Rajya Shaba, where the ruling NDA does not have a clear majority. Even after the acceptance in Rajya Shaba, the legislation should get the acceptance at the state level. With things like Modi’s promise and Jaitley resolve of trying to push the bill again in the parliament session, the promised Messiah may have a fighting chance to see the light finally.

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