India’s GST regime one of the ‘most complex’ in world, says World Bank

The World Bank has quite rightly criticized the complicated goods and services tax (GST) introduced in India.

New Delhi: The World Bank has termed India’s Good and Services Tax (GST) regime as one of the most complex systems in the world, adding that it has the second-highest tax rate in the world, out of a sample of 115 countries that follow a similar indirect taxation system. The ‘One Nation One Tax’ regime has created a lot of ripples across sectors, who had initially asked the government to roll it out in a systemic manner to avoid confusion. However, the Narendra Modi-led Government introduced the measure from July 1, 2017.

High GST rates are a problem because such indirect taxes are regressive. The complicated rate structure limits efficiency gains. It is good that the Council has been trying in its recent meetings to address these problems.

This newspaper has often argued that India should ideally have most economic activity taxed at a single rate, with a small list of essentials that attract no tax as well as a small list of demerit goods that should be taxed at a high rate. Additionally, the best way to bring down rates is by raising more direct taxes.

In other words, direct tax reforms are the key to lower indirect tax rates.

Source: Timesnownews

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