Let’s make GST a good and simple tax

 









The introduction of the value-added tax (VAT) has been perhaps the most important tax reform seen across countries in the last three decades. As of 2018, as many as 166 out of the 193 countries that are members of the UN had implemented the VAT in one form or another. In India, it has been a remarkable achievement and a unique experiment in cooperative federalism. In this, both the Union and the state governments gave up their tax autonomy in favour of harmonising domestic trade taxes. The objective of the reform was to simplify the indirect tax system, make the system competitive by reducing cascading effects and increase revenue productivity. Building a consensus to implement GST by combining 11 different domestic indirect taxes levied by the Centre, states and Union territories with legislatures took considerable time and involved several compromises in the structure and operational details. Not surprisingly, some bad features entered into the structure of the tax to get it accepted. It has now become extremely difficult to remove them.



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