GST: A Critical Reform That Will Drive Economic Growth

By simplifying taxation norms, the new regulation will bring in transparency across sectors and encourage foreign investors to invest in India

- Rashesh Shah

AT THE STROKE OF MIDNIGHT ON THE LAST DAY OF JUNE, India formally entered the Goods and Services (GST) Tax era. There is a lot of optimism about the new regime, but also some amount of apprehension. A lot of this concern revolves around the changes that the movement to GST entails rather than a fear of the regulation itself.

Every time there is a new rule, whether it is the RERA [Real Estate (Regulation and Development) Act] or the bankruptcy code, there is a lot of apprehension about the way in which the systems and processes will have to change. But these regulations have had a positive impact and will reap economic rewards for us in the future.

Given how mammoth it is, GST was certain to attract some concerns. But we need to give the economy some time to adjust to the new normal. Three to six months down the line, we will start to see the incremental benefits of GST trickling in.

GST is going to be a critical reform for the Indian economy as it would simplify taxation norms by consolidating a range of taxes under one single umbrella. At present, different states have different tax laws. There are nearly 17 taxes that businesses pay to various authorities, making it a cumbersome and expensive affair. GST will result in a simplified tax structure and a unified tax base, with common rules and administrative procedures coming into effect across the country. It will also result in widening of the tax base to include a comprehensive list of goods and services. This will bring in transparency and encourage investments in organised sectors, helping the economy gather growth momentum.

Boost to FDI