GST tax regime operational in over 100 nations

The goods and services tax (GST) regime is operational in 160 countries in the world, including the European Union, Australia, Canada, Brazil and South Africa and China.

The empowered committee of state finance ministers had gone for a week's visit to Australia recently to study the implementation of the GST in the country.

The high-powered committee has made eight study trips abroad, on many occasions visiting more than one country, since it started deliberations on the path-breaking tax reform.

The rationale of these visits was to dispel the fear psychosis amongst states that their financial powers would be eroded with the introduction of GST.

There have been sharp differences between some states and the Centre over the proposed tax reform and the rift tends to widen due to political reasons when the state government is ruled by an opposition party.

According to tax experts the Australian model held valuable lessons for India. The debate in India for the past eight years has been about who decides the tax rates and who holds veto power. The implementation of the tax hinges on coordination between the Centre and the states. The federal models of Canada and Australia are two systems from which adaptations can be made to the Indian model.

In the case of Canada where the federal government imposes the tax and it is optional for provinces to adopt it. However, in Australia the federal government imposes a national tax, administers it and distributes the entire revenue among the provinces.

Last year, the state finance minister's committee made a nine-day trip to Beijing and Shanghai in September. The first trip of the committee was in 2006 to the UK, Canada and Italy, for 11 days.

Subsequently, the committee headed by then West Bengal finance minister Asim Dasgupta visited Australia and Singapore in May 2007 and Brazil and the UK in August of the same year. France, Belgium, Spain and Luxembourg were part of an 11-day trip in 2011.

This was followed by a 15-day tour of Canada and Japan in September 2012 and 12 days in South Africa in July 2013.

(In association with Mail Today)