Indirect Tax Reforms in India: Towards National Goods and Service Tax

Journal Of Commerce And Business Studies, Delhi School Of Economics, University Of Delhi (2013)

Posted: 6 Jul 2017

See all articles by Niti Bhasin

Niti Bhasin

University of Delhi - Department of Commerce

Date Written: January 1, 2013

Abstract

While the revenue significance of indirect taxes, particularly sales tax for the States in India is undisputed, there is a need for rationalization and harmonization of these taxes. This paper looks at the evolution of sales taxes from the origin-based Central Sales Tax (CST) to Value Added Tax (VAT) and now to a proposed destination-based GST. To overcome the weaknesses of the sales tax system, including cascading and uneconomic allocation of production, VAT was introduced by the Government in 2005. VAT was seen as a move towards a more integrated market. To continue this reform process and evolve an efficient and harmonized consumption tax system in the country, the Government has now proposed a comprehensive Goods and Service GST tax. The introduction of GST is expected to end the long standing distortions of differential treatment of manufacturing and service sector It will lead to the abolition of various Central and State indirect taxes and eliminate the cascading effects of multiple layers of taxation.

Keywords: Sales Tax, Value-Added Tax, Goods and Service Tax

Suggested Citation

Bhasin, Niti, Indirect Tax Reforms in India: Towards National Goods and Service Tax (January 1, 2013). Journal Of Commerce And Business Studies, Delhi School Of Economics, University Of Delhi (2013), Available at SSRN: https://ssrn.com/abstract=2996421

Niti Bhasin (Contact Author)

University of Delhi - Department of Commerce ( email )

Department of Commerce, Delhi School of Economics
University of Delhi
Delhi, 110007
India

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