A GAME CHANGER FOR THE INDIAN ECONOMY
It has been termed a potential game changer, the single biggest tax reform undertaken by India in 70 years of independence, one the government says is founded on the concept of “one nation, one market, one tax.”
The moment, which India has waited for more than a decade, is finally beckoning. On 1 July, a single indirect tax regime will kick into force in Asia’s third largest economy, dismantling inter-state barriers to trade in goods and services.
The rollout of the goods and services tax (GST) on 1 July will, in a single stroke, convert India into a unified, continent-sized market of 1.3 billion people,” Prime Minister Narendra Modi wrote in on his visit to the US in the last week of June.
Essentially, the $2.4-trillion economy is making a bold attempt to transform itself by removing internal tariff barriers and collapsing 17 central, state and local body taxes into a single GST.
Policymakers are betting on GST to achieve various economic goals in one stroke—promoting the manufacturing sector, boosting exports by making production more competitive, creating more jobs, improving the investment climate, cutting down tax evasion and lowering the compliance cost to businesses.
The GST regime seeks to break the barriers that currently exist between states and make movement of goods between different states easier.