India should be able to implement the Goods and Services Tax (GST) in April 2017, Revenue Secretary Hasmukh Adhia said on Thursday after the Rajya Sabha passed a key enabling amendment to the Constitution.

Adhia said his target was for the necessary majority of states to ratify the constitutional change within 30 days, allowing a new GST Council to finalise the legislation that will set the rate and other terms of the tax.

He also told a news conference that it would be "premature” to expect the GST's standard rate to be 18 per cent, as proposed by the government's own chief economic adviser, saying this would imply significant revenue losses.

Most revenues came from excise duty and value-added tax whose standard rates, taken together, add up to a tax burden of 27 per cent for businesses selling goods. “Revenue neutrality has to be maintained,” Adhia told reporters at a news briefing.

If all goes to plan, the biggest tax reform since independence would transform its $2 trillion economy and market of 1.3 billion people into a common market for the first time, with potentially significant long-term growth benefits.

Tax experts say, however, that the challenge of setting up a new IT system, training up tens of thousands of tax officials and briefing companies on the change could cause the launch date to slip by as much as six months.

Related Topics