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IMF: GST Could Raise India's GDP to Over 8%

IMF: GST Could Raise India's GDP to Over 8%

The International Monetary Fund said that the adoption of the Goods and Services Tax could help raise India’s medium-term GDP growth to over eight percent and create a single national market for enhancing the efficiency of the movement of goods and services. It also suggested that the GST “should have minimal exemptions, uniform cross-state rates, and as few tax rate tiers as possible.”

Zee News reports IMF’s additional inputs for India:

  • Structural reforms could lead to significantly stronger growth
  • A sustained period of continued low global energy prices would be beneficial to India
  • Key sectors such as energy and real estate should be kept within the tax base
  •  A lower corporate income tax rate with smaller and streamlined deductions and exemptions should continue
  • Efforts to improve tax administration should be stepped up

The Government of India expects to roll out the GST regime by July 1.

Taxes

IMF further noted:

  • Export competitiveness will rise as the cost of logistics fall
  • GST will raise general government tax collection; foster compliance, and help ensure a decline in the share of the informal sector
  • It can support fiscal consolidation efforts which, in addition to economic efficiency gains, should solidify recent monetary policy strides in achieving low and stable inflation in the medium-term
  • Destination-based GST will create a single Indian market, and will greatly enhance India as an investment destination.

 

 

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