'After GST, India more appealing to Chinese firms'

Cheryl Sanders
August 8, 2016

State governments widely support the GST because it will boost their share of taxes and make cross-border trade far smoother. The passage of the Goods and Services Tax (GST) Bill is a watershed moment in the economic history of India. Members of AIADMK, the ruling party in Tamil Nadu state, abstained from voting and staged a walkout in protest at the bill.

Possibly one of the biggest economic reforms since the formation of the government, the proposal for the Goods and Service Tax (GST) was submitted in the Rajya Sabha on Wednesday. With GST in the picture all other value added excises such as the service tax to the Central Government and even the Value Added Tax (VAT) to the state government will be no longer be applicable.

While the GST Bill, 2011, did not have a provision for compensation, the NDA government initially provided for compensation to the states fully for 3 years and then for staggered compensation for 2 years.

The key challenge for the central government is to ensure both the Centre and the states benefit from the GST - in other words, get as much as or more money than they now do.


The CPI-M-led LDF government in Kerala on Friday, charged the Centre with including certain new clauses in the GST Bill passed in the Rajya Sabha and departing from the consensus arrived at the meeting of Empowered Committee of State Finance Ministers.

"One of the most significant aspects is that the GST bill was passed with unanimity".

"The clearance of the much awaited GST bill in Rajya Sabha with a thumping majority will facilitate in the ease of doing business in the country".

"India's growth will continue to expand its economy and create opportunities for its workforce", Rajiv Burman, Human Resource, Kronos India and Senior Director and Head (human resources) APAC, said.


"Passing of GST in a single stroke will benefit both corporates and the economy". The GST will be levied on all goodsand services, except alcoholic liquor for human consumption; GST shall be levied on petroleum and petroleum products at a later date, based upon the recommendations of the GST Council.

An op-ed piece in Global Times said China was willing to work with India to make GST Bill a "reality".

Since this is a destination tax, Tamil Nadu also demanded that origin states (manufacturing ones, that is) be allowed to retain 4% of the revenues earmarked for the Centre on inter-state transactions, to address concerns about harming successful states. Under GST this nil rate would be replaced by a combination of basic custom duty and the applicable GST rate, as explained in a blog by Bridge to India associate director of consulting Jasmeet Khurana.


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