Abstract
The implementation of a destination-based consumption type GST in India in July 2017 is a landmark reform implemented to simplify the tax system and minimize distortions by subsuming all domestic trade taxes on goods and services and enhance revenue productivity. The States were persuaded to forgo their revenue autonomy in favour of tax harmonization. The tax has been evolving, and the structure of the tax continues to be complicated with multiple rates. Failure to stabilize the technology platform has resulted in low compliance defeating the objective of raising revenue productivity. The controversy over the paying of compensation to the States for the loss of revenue due to the pandemic has created a serious trust deficit. The recent attempts to introduce e-invoicing system have improved compliance with monthly revenue exceeding Rs. 1 trillion since October 2020. Increasing trend in revenues provides opportunity to rationalize the rate structure.
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