- Government to present GST bill in parliament on Wednesday
- Seen boosting economic growth as much as 2 percentage points
India’s main opposition party will stop blocking a proposed national sales tax, according to a person familiar with the matter, rekindling optimism that a decade-long wait for one of the country’s biggest economic reforms is almost over.
Prime Minister Narendra Modi’s government has accepted the Congress party’s view on the goods-and-services tax, the person said, asking not to be identified citing rules for speaking with the media. The government is due to present the bill amending the constitution to lawmakers on Wednesday.
The GST, which is estimated to boost economic growth by as much as 2 percentage points, is now the closest it’s ever been to clearance. First proposed in 2006, the legislation had been blocked for about a year in the upper house of parliament, where Modi lacks the two-thirds majority needed for approval.
By replacing more than a dozen levies, the GST will create a single market with 1.3 billion consumers. The nation’s benchmark stock index gained last month on optimism the reform will be implemented.
Signs of a detente first appeared last week, when Modi’s administration agreed to scrap a proposed 1 percent additional levy -- a key demand of the Congress party. The opposition had also demanded a cap on the overall tax rate at 18 percent and creation of an independent dispute resolution panel headed by a retired judge.
The amended version of the bill now needs approval from the Modi-controlled lower house, a formality because Modi’s party dominates the chamber. Then it must be ratified by at least half of India’s states, before parliament passes another bill to enact the GST.
The tax rate will be decided separately by a so-called GST Council. Infosys Ltd., India’s second-biggest software exporter, won a contract last year to build and operate network systems.