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
- Â 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.
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.