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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Posted on by Gunjan Bagla
Gunjan Bagla
California-based management consultant Gunjan Bagla runs Amritt, a consulting firm helping American companies to succeed in India. Amritt is the trusted advisor for India market research, India business development, India market entry, Global Engineering, Global Technology Scouting, India R&D and Open Innovation. Gunjan is author of "Business in 21st Century India: How to Profit Today from Tomorrow’s Most Exciting Market" (Hachette Book Group, 2008), Amazon's top rated title on the subject. He has appeared as the India Expert on BBC Television, Bloomberg TV, Fox Cable Business and has been quoted in the New York Times, the Los Angeles Times, the Hollywood Reporter and Business Week for his expertise on India.

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