Goods and Services Tax rollout may face Delhi roadblock
February, 11th 2015
The NDA government's efforts to move ahead with implementation of the Goods and Services Tax (GST) may face fresh hurdles with the new government in Delhi led by the Aam Aadmi Party putting up roadblocks.
AAP's stunning victory in the Delhi elections could also slow down the pace of opening up various sectors to foreign direct investment. AAP is opposed to any opening up of the multi-brand retail sector to foreign investors and during its 49-day tenure, it had made it clear that it would not allow foreign retailers in the segment in the national capital.
This could potentially blunt any move on opening up the multi-brand retail sector to foreign investors. There was a view that Prime Minister Narendra Modi may open up the sector once he consolidated his position and his party got entrenched in several states across the country.
While the BJP is opposed to opening up of the sector, there was a faint hope that Modi may opt for a more aggressive stance on the issue as he moves to create jobs and attract investment. In its action plan for Delhi, AAP has said its government will continue with its decision of not allowing FDI in retail.
Experts say the rollout of GST, the country's most ambitious indirect tax reform, may face more delays. There are some states which are still opposed to some provisions of GST and Delhi under Arvind Kejriwal's stewardship could lend more weight to those voices of dissent.
AAP has already promised to cut VAT rates in Delhi and experts say there could be some opposition to the contours of the GST rollout plans as well. AAP has vowed to formulate trader-friendly policies and streamline rules and regulations for setting up and running businesses. This may help in Modi's move to raise India's ranking in the 'Ease of Doing' business index and is seen as a positive step.
"We will simplify compliance and licensing for traders and put in place a system of single window clearance. We will also ensure that starting a trade or business in Delhi takes a maximum time of one week. As vital stakeholders, the participation of traders in the framing of trade policies will be encouraged," AAP had said in its action plan ahead of the polls.
It had also said that Delhi will have the lowest VAT regime in India. "We will simplify VAT and other tax structures. One portion of VAT collected from every locality and market will be used for maintenance and upgradation of that market to foster business and trade," the party had said.
It also promised to end VAT raids and inspector raj and said it will simplify VAT rules, processes and forms. The 30-page VAT form will be crunched into one page for traders.