New Delhi: The long-awaited goods and services tax (GST) bill is likely to be passed this year and this new indirect taxes regime is likely to be rolled out from April next year, says an HSBC report. According to the global financial services firm, the increased presence of smaller parties could also help push through other pieces of legislation like the Bankruptcy Code and the RBI Amendment Bill (which formalises inflation targeting).
"We believe the BJP’s chances of passing the GST Bill are improving and think it will be passed in 2016, ready to be rolled out from April 2017, especially as the government has made changes to make it more amenable to other parties," HSBC said in a research note on April 21. GST is a long-awaited and important piece of legislation that aims to simplify and standardise India's tax structure.
The GST Bill requires an amendment to the constitution, for which a two-thirds majority is needed in each house of Parliament. According to the global brokerage firm the balance of power in Rajya Sabha or the Upper House, may change over the summer and this could create an opportunity for the ruling BJP to pass important pieces of legislation.
Four states and one union territory of India - Tamil Nadu, Kerala, Assam, West Bengal, and Puducherry - are holding elections over April and May. The results are due on May 19. A third of the members of the Upper House step down every two years. Over the rest of 2016, significantly, 56 out of 245 members will be up for re-election.
This is important because the BJP lacks a majority in the Rajya Sabha. A change in the balance of power could help the BJP push through long-delayed pieces of legislation, such as GST bill, HSBC said.
