TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, September 27, 2017

India Eyes Spending Cuts As Glitches In New Tax Hit Revenue

Reuters, India Eyes Spending Cuts as Glitches in New Tax Hit Revenue 

India could be forced to cut spending on key infrastructure such as railways and highways as lower-than-expected tax collections and sluggish growth have upset the government’s budget calculations, two finance ministry officials said.

Tax receipts were about $7.8 billion in July - a little over half the monthly target - mostly because millions of firms failed to comply with the new Goods and Services Tax (GST) system that harmonizes all state and federal sales taxes but is still a work in progress.

The big worry is that economic growth, which slipped to a three-year low in the last quarter, could take a further hit if the public spending that largely underpinned expansion were to be slashed....

GST “CHAOS AND PANDEMONIUM”

The main problem has been the introduction of the GST, billed as India’s biggest tax reform in 70 years.

Ambiguous rules, an onerous return filing system and glitches with its IT back-end have made doing business far more complicated for many companies. Frequent changes in tax rates after the GST’s launch have heightened business uncertainty, resulting in many firms failing to register for the new tax....

https://taxprof.typepad.com/taxprof_blog/2017/09/india-eyes-spending-cuts-as-glitches-in-new-tax-hit-revenue.html

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