New Delhi : Malaysia scrapped a 6 per cent rate on the goods and services tax, fulfilling a campaign promise by Prime Minister Mahathir Mohamad that gave him an unexpected win in last week’s election.

The tax rate will be set at zero per cent from June 1, the Ministry of Finance said. All businesses must comply with the ruling, it said.

Although the development in Malaysia may not have any direct impact on India, experts suggest the government should closely study the Malaysian experience, take ‘necessary precautions’, and come up with additional reforms to expand GST in a phased manner.

“Rolling back the GST system, which is only three years old there, would be challenging for India as well as businesses. It might be worthwhile for the government to closely study the Malaysian experience and take necessary precautions over the next few years,” said Pratik Jain, partner, PwC India. “The Indian GST is now stabilising, tax base is expanding, inflation is largely under control, and there has hardly been any resistance from businesses,” said Jain.

“It would be good if a phase-wise plan on the additional reform requirements such as expansion of GST into real estate, electricity, petroleum products, etc and changes such as reverse charge, tax collection at source are announced,” said MS Mani, partner, Deloitte.

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