Difficulties on GST, but will be in place by 2014: PM

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Prime Minister Manmohan Singh Tuesday acknowledged that there are difficulties with some state governments over the implementation of the Goods and Services Tax (GST) but said that he is confident it would be implemented in "an appropriate type" by 2014.

"The objective of the Indian government is to move towards a Goods and Services Tax applicable all over the country. But India is a federation, and in a federation there are difficulties of getting all the states to agree and surrender their tax power in favour of this GST," said the prime minister.

The prime minister was replying to a question on whether he could give a time-frame for the implementation of GST whe the Japan Business Federation, the Keidanren, and the Indo-Japan Business Leaders Forum hosted luncheon for him.

The GST is a tax reform that seeks to create one common market for all goods and services in India. It has long been delayed due to differences between the centre and states over its design and issue of central sales tax compensation.

"I am confident that we will overcome that hurdle. We have been working for the last few months to persuade more and more state governments to fall in line. But it does require amendment of constitutional freedom, and amending the constitution requires much more efforts than for ordinary amendments. So I cannot say that we can deliver the GST tomorrow. But if you ask me, by the year 2014, I am confident that a GST of appropriate type will be in place," he said.

The implementation of GST, the prime minister added, will happen only after a new government comes to power after the elections in April next year.

"We are going to elections in Lok Sabha in April 2014. Once this election is about to begin, I think there will be a strong determined effort, whichever government is there, to move towards the GST because there is general agreement among all professionals of all varieties and of all shades of opinion that we need a GST to help the Indian growth story," the prime minister added.