India may have moved closer to the much-awaited goods & services tax (GST) with the government and Opposition finding some common ground on crucial elements of the proposed levy. This follows PM Narendra Modi and the ruling Bharatiya Janata Party reaching out to Congress in the search for a compromise to break the stalemate on GST. The government is likely to concede the Congress demand to do away with the 1% tax on interstate sales, which was proposed to compensate manufacturing states such as Maharashtra, Gujarat and Tamil Nadu that fear loss of revenue in the new indirect tax regime. Government sources, however, indicated that capping the GST rate in the Constitution — as demanded by Congress — is not acceptable. 

The government is open to the idea of including the cap in the GST law, which can be more easily changed than the Constitution.

The proposed GST seeks to replace excise duty, service tax, value-added tax, entry tax and octroi with a single levy and create a unified national market in the country from April 1, 2016, a deadline that may be missed if Congress continues to oppose the Bill in the Upper House where the BJP-led National Democratic Alliance does not have the requisite numbers .. 

The government has awarded the contract to build and operate GST's IT backbone to Infosys, reflecting its keenness to implement the tax reform by the deadline. GST, touted as the most comprehensive reform of indirect taxes since Independence, could lift the country's GDP growth by 1-2 percentage points, it has been estimated.