In Modi’s National Sales Tax, India’s Businesses See ‘Mountain of Sorrows’

Even the prime minister’s ban on India’s largest currency notes, while a daring step, has come under criticism as growth has slowed to 6.1 percent in the first quarter of this year, down from 7.9 percent a year earlier.

With the introduction of the new goods and services tax, the government is hoping not just to streamline the myriad levies on businesses but to quiet the critics who say Mr. Modi has failed to deliver on his policy promises.

“This would be almost a test for Modi himself,” Harsh Pant, a fellow at the Observer Research Foundation, a New Delhi think tank, said of the new sales tax. “If it goes really badly, he’ll be in for trouble” in national elections in 2019.

Mr. Modi survived the chaos caused by his currency move last year by convincing the poor that cash shortages and lost wages were worth enduring in the fight against India’s endemic corruption. He also argued that the rich were hit the hardest as holders of most of the illicit cash, known as “black money,” that his currency ban aimed to render worthless.

Now, with the new tax system about to take effect, some are questioning whether it will live up to its billing as a radical simplifier of business taxes that will spur growth, or whether it will turn out to be just as complex as the one it is supposed to be simplifying.

In a possible sign of Modi government concern about how the public will accept the new tax rules, a Bollywood superstar, Amitabh Bachchan, has been enlisted for promotional videos in which he appears with the colors of the Indian flag on his face and proclaims, “One nation, one tax, one market.”

India has been discussing the idea of substituting a broad sales tax for the jumble of federal and state levies for much of the past decade. The previous, Congress Party-led government supported the idea, and Mr. Modi’s Bharatiya Janata Party made the new sales tax part of its manifesto.

In many ways, the idea makes perfect sense. Facing an array of taxes from the central government and states, Indian businesses have a hard time building a nationwide business. Almost everyone seemed to agree that these taxes — excise, value added, sales and service levies, among others — should be replaced with a single sales tax.

Experts estimated that moving to a single tax would add a hefty two percentage points to India’s growth rate.

But in practice, getting the goods and…

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