New Delhi: Government of India gave thumps up and cleared the way on Wednesday for India to forge a single economic zone from its thicket of overlapping different state taxes. It is also the most significant tax reform since independence for what is now Asia’s third largest economy.
Economists estimate that the new tax scheme, which replaces 15 existing state and federal taxes, could increase the country’s economic growth rate between half and two percentage points.
It is expected for easing a cumbersome tax system, curb tax evasion, improve compliance, and spur growth. The GST regime would streamline the taxation system and make it much more transparent, but would also create multiple taxation points, which will be a “challenge” for the IT industry, Nasscom said today.
Chandrasekhar said moving from single to multiple points could be a challenge from the point of view of ease of doing business. He said he met finance minister Arun Jaitley, who assured him that these issues would be looked into.
Revenue Secretary Hasmukh Adhia and economic adviser Arvind Subramanian say no country has claimed a flawless GST since inception, and further and better change in complex systems is incremental.