Present State of Goods and Services Tax (GST) Reform in India

30 Pages Posted: 24 Nov 2015 Last revised: 30 Nov 2015

See all articles by Sacchidananda Mukherjee

Sacchidananda Mukherjee

National Institute of Public Finance and Policy

Date Written: November 1, 2015

Abstract

To remove cascading effect of taxes and provide a common nation-wide market for goods and services, India is moving towards introduction of Goods and Services Tax (GST). Under the proposed indirect tax reform both Central and State Governments will have concurrent taxation power to levy tax on supply of goods and services. It is expected that the proposed regime will improve tax collection and minimize leakage, as both Central and State Tax Administrations will monitor and assess the same set of taxpayers. There are several challenges before introduction of GST and these can be classified into two broad heads – a) GST Design and Structure related, and b) GST Administration and Institutional. On design related issues, broad consensus on choice of revenue neutral rates (RNRs), harmonization of GST rate(s) across States, harmonization of list of exempted and excluded goods and services and thresholds for mandatory GST registration across States are yet to be reached. Similarly, there are several issues involved in tax administration (between Central and State Tax Administrations and also across State Tax Administrations) which are not yet solved. Taking cognizance of discussion available in the public domain this paper attempts to provide a broad contour of the proposed GST regime and highlights major challenges which require immediate attention of the Governments.

Keywords: Goods and Services Tax, Value Added Tax, Design and Administration of Taxation, Fiscal Federalism, Indirect Taxation, India

JEL Classification: H250, H710, H770

Suggested Citation

Mukherjee, Sacchidananda, Present State of Goods and Services Tax (GST) Reform in India (November 1, 2015). Tax and Transfer Policy Institute Working Paper No. 6/2015. Available at SSRN: https://ssrn.com/abstract=2694349 or http://dx.doi.org/10.2139/ssrn.2694349

Sacchidananda Mukherjee (Contact Author)

National Institute of Public Finance and Policy ( email )

18/2, Satsang Vihar Marg
Special Institutional Area
New Delhi, Delhi 110067
India
+919868421239 (Phone)

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