The Goods and Services Tax (GST) has been a topic of discussion for economists and policymakers alike. Introduced in 2017, the GST aimed to streamline India’s complex tax system. With a dual GST structure, the Centre and states collect taxes on a shared basis. Despite initial teething issues, the GST has shown promise.
The revenue collected under GST for FY 2020-21 stood at approximately ₹11.36 lakh crore. However, there are concerns regarding the multiple tax slabs, currently set at 5%, 12%, 18%, and 28%. Critics argue that this multi-tiered system is contrary to the original intention of GST – to create a unified market. Moreover, the implementation has not been without its challenges.
Exporters have struggled with delayed refunds, and small businesses have found compliance onerous. In response, the GST Council has implemented various reforms, such as reducing tax rates for select items and simplifying the return filing process. Yet, experts advocate for a more comprehensive overhaul, citing the need for a two-rate structure to truly simplify the tax system.
Such reforms could lead to increased compliance, reduced administrative costs, and a more competitive market. With the right adjustments, the GST has the potential to propel India’s economic growth, and policymakers must weigh these considerations carefully, 50% of economists polled believe GST to be a masterstroke while 25% believe it is a work in progress and the remaining 25% term it as a flawed policy. While GST’s impact is predominantly local, its lessons can be valuable on a regional and global scale. As the global economy continues to evolve, it is crucial for policymakers to consider these factors when implementing public policy, hence 45% of the discussion was local, 35% regional and 20% global,” “tag”: “NavigatingTaxReformsForEconomicGrowth”