What will be the benefits of India’s Goods and Services Tax?
With its practical implications set to unfold in the near future, we look at what the main benefits of the GST will be
According to the ‘Modi Government Progress Report,’ produced by the UK India Business Council, the GST has many potential positives, including:
- Harmonisation – ‘The goal of the GST is to turn India into a ‘single market’. This would be a marked departure from the fragmented nature of the current market where exporting goods from one state to another is riddled with multiple checks and taxes.’
- Efficiency – ‘A more efficient and hassle free business environment.’
- Cheaper goods – ‘The GST would also be a boon for the consumers who will now bear less tax burden than before since the tax rate will be lower, and hence the goods will be cheaper.
The report also finds that the GST will help to reduce corruption and improve transparency in India’s tax system.
- Less corruption – ‘The GST is also expected to reduce corruption and tax evasion across the country. By ridding India of multiple taxes and tax authorities, it decreases the chances of any wrong doing.’
Both Indian and British government officials have been talking up the prospects of the GST, with Prime Minister Modi heralding it as a Bill that will “further strengthen the way [India] is trying to accelerate growth and make the economy predictable.”
The Prime Minister, in a series of tweets, said that this reform will promote ‘Make in India’, help exports and thus boost employment, while at the same time providing enhanced revenue.
He added, “GST will also be the best example of cooperative federalism. Together we will take India to new heights of progress.”
Meanwhile, Priti Patel MP, UK Secretary of State for International Development, described the GST on an official visit to India earlier this month, as “an important piece of reform” that will make India “more attractive when it comes to investment opportunities and also for business to business relationship.”
The bar has been set high, and so have the hurdles, but providing these are overcome, this reform remains on course to change the face of the Indian economy forever.
If you would like to download the full UK India Business Council Report to find out more about the GST, and other hits and misses from Modi’s first two years in office, please follow this link.