Tax Matters

India Poised to Implement Historic Indirect Tax Overhaul

Posted in: Tax Technology VAT

As global tax reform driven by OECD Base Erosion and Profit Shifting (BEPS) Actions progresses, regional overhauls are also speeding ahead. India is now one step closer to rolling out the largest reform of its indirect tax system in a quarter century.

After the resolution of some power-sharing issues between federal and state officials, India’s Goods and Services Tax (GST) bill is headed for clearance consideration at the GST Council’s next meeting on Feb. 18. The bill will then be presented in Parliament in March 2017, with its implementation expected to begin by July 1.

The proposed dually-controlled GST system would impose levies on a taxation base shared between the Centre (i.e., the federal level) and India’s States. The new system would replace complex value-added tax (VAT) systems – which currently exist at the federal and state levels – along with a confusing collection of numerous additional duties and taxes. The long-anticipated implementation of this tax reform has required a massive rules-making effort with extensive discussions among government officials, business executives, tax and accounting firm leaders, and other stakeholders. Big 4 accounting firms like Deloitte and PricewaterhouseCoopers, have created micro-sites devoted to information and analysis related to India’s GST reform while my colleague, Ramnarayan Balakrishnan, Senior Tax Research Analyst from our office in India has provided some insights in two articles published in Tax India Online and Tax Management India.

While the expected move to a more straightforward tax regime is welcome to many, the proposed system differs in numerous and significant ways from the existing tax regime. As such, complying with the new GST system will require considerable changes within tax departments, which will also face some new challenges. For example, GST implementation may create greater information security risks “as a result of the aggregation of data from multiple sources,” according to a recent article in The Economic Times’ CIO publication.

Vertex experts including Ram, are closely tracking the bill’s progress, along with related data management challenges and any other GST-related issues that may result, to ensure our continued ability to support these specific tax needs. We’ll keep you posted as this groundbreaking tax reform progresses.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.

About this Contributor
Tricia Schafer-Petrecz

Tricia Schafer-Petrecz manages Vertex's public relations and social media functions. In her role as reporter for the Tax Matters blog, she coordinates and writes  pieces on industry trends, legislation and technology in the tax industry.

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