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India eyes prompt GST launch, talk of 18% rate "premature": official

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India should be able to implement a new Goods and Services Tax (GST) in April 2017, a senior finance ministry official said on Thursday after parliament's upper house passed a key enabling amendment to the constitution.

[NEW DELHI] India should be able to implement a new Goods and Services Tax (GST) in April 2017, a senior finance ministry official said on Thursday after parliament's upper house passed a key enabling amendment to the constitution.

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

Mr Adhia 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," Mr Adhia told reporters at a news briefing.

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If all goes to plan, the biggest tax reform since Indian independence would transform its US$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.

REUTERS

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