Companies in India are set to benefit from the creation of a landmark tax measure, a decade-old proposal which has been finally approved by the upper house of parliament.
With the goods-and-services tax, known as GST, all goods and services are taxed at the point of consumption rather than production.
A simplified tax regime could ease the transfer of goods across the country and reduce corruption. The measure is expected to add 2 percentage points to India’s gross domestic product as tax compliance improves, reports Bloomberg.
The constitutional amendment has yet to be endorsed by the lower house and then ratified by at least half of all states, a process projected to be concluded before the end of the year. After a majority of states approve the constitutional amendment, parliament must pass at least another bill to implement the tax. A newly formed GST council made up of federal and state officials would decide the overall rate, which may vary for different goods, according to Bloomberg.