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India braces for its biggest-ever tax reform

Wednesday, June 28, 2017 - 01:51

India is launching a new national Goods and Services Tax (GST) on July 1 that will unify its $2 trillion economy and 1.3 billion people into a single market for the first time. But, as Ryan Brooks reports, the Indian version of ''one nation, one tax, one market,'' is more complex and will be tougher to comply with than is the case in many other countries.

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Nearly half of Indian businesses bracing a wrench in the works - as small shops like this one stare down the barrel of a tax overhaul - coming into effect on July 1st. The nationwide Goods and Services Tax is designed to unify and simplify the country's 2 trillion dollar economy - But as Reuters' Doug Busvine explains, it could mean painful change for India's vast stable of small businesses. (SOUNDBITE) (English) DOUGLAS BUSVINE, REUTERS CORRESPONDENT, SAYING: "I've just visited a small textile shop up the street behind me, the proprietor has 14 ancient power looms around 10 workers and he worries that he will have to hire an accountant to do his books and file his tax returns when the GST goes live on July the 1st. He reckons that the cost of hiring the accountants could eat up two-thirds of his annual profit." The GST is sparking flash-backs of a sweeping ban on bank notes last year - another radical move that sent shockwaves through the economy. But at least it was fairly straightforward. Which is more than can be said for the tax plan. (SOUNDBITE) (English) DOUGLAS BUSVINE, REUTERS CORRESPONDENT, SAYING: "It's so complicated. There are four tax rates, and multiple exceptions and businesses will have to file three online tax returns every month. Well the company I just visited doesn't even have a computer. The proprietor had two calculators on his desk and a ledger in which he kept track of his invoices." The top official in charge of tax reform has played down the risk of job losses- saying they'll be offset by new business in the service sector - paid for by the GST. But that's cold comfort for business owners up and down the country - who are gearing up for chaos.

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India braces for its biggest-ever tax reform

Wednesday, June 28, 2017 - 01:51