India has overcome its teething troubles with GST, and that should aid the process of bringing down the blended tax rate to the level initially proposed but not achieved. At the very least, it should arrest the trend of the effective rate diverging further. States have, by and large, put the issue of compensation behind them because of revenue lost due to the switch to the new tax. They should now be more receptive to the idea of collapsing multiple rates with a positive outcome on revenue. On its part, the Centre will have to restrain its tendency to impose cesses. States may also be more inclined to ease their grip on taxing fuel. Bringing fuel into the GST's ambit is necessary to lower the tax incidence and introduce an explicit carbon tax. Jet fuel could be part of the early harvest.
The GST architecture allows for introducing further layers of devolution, for instance, to municipal bodies. This could create new corridors for financing urban and rural development, particularly with India's underdeveloped market for credit to local bodies.
Read More News on
(Catch all the Business News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)
Subscribe to The Economic Times Prime and read the ET ePaper online.
Read More News on
(Catch all the Business News, Breaking News, Budget 2024 Events and Latest News Updates on The Economic Times.)
Subscribe to The Economic Times Prime and read the ET ePaper online.