Abstract
On 8th September 2016, President Pranab Mukherjee approved the government‟s flagship Goods and Services Tax (GST) Bill. After going through a long journey of more than 16 years which first started in year 2000 in a Committee headed by Asim Dasgupta, GST will finally come into force from 1st April, 2017. GST is a single „unified‟ indirect tax levied on goods and services that subsumes multiple taxes levied at the Central and the State level. This paper draws attention to the implications of a „comprehensive‟ GST for economic growth, efficient resource allocation, GDP growth, tax compliance and administration, imports and exports, manufacturing sector, tax revenue efficiency and State finances. The findings of various Task forces/Committees conclude that GST may turn out to be a positive-sum game by bringing in “collective gain” for agriculture, manufacturing and trading sectors along with the final consumers and the government. Irrespective of the wide array of opportunities opened up by GST, the government must be mindful of its accompanying challenges such as development of a sound IT infrastructure, tax administration and modern information systems and determination of GST rate, exemptions, etc. The success of the government in addressing these challenges will determine the sustainability of this major indirect tax reform in the long run.
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