The International Monetary Fund or IMF today described the Goods and Services Tax (GST) as a “milestone reform” in India’s tax policy, but pushed for a simplified structure, saying the multiple rate structure and other features could give rise to high compliance and administrative costs.
In its annual country report, the International Monetary Fund also said that a dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality.
The GST is an indirect tax levied on the supply of goods and services in India. It came into effect on July 1, 2017.
The IMF said that GST is a milestone reform in India’s tax policy, taking the important step of unifying and harmonising numerous indirect taxes across all states of the federation and the central government.
“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing…