The soon-to-be implemented Goods and Services Tax (GST) will not just create a national market but will also expand the tax base that in turn will lower the overall taxes in the long-term, according to Reserve Bank of India’s governor Urjit Patel.
“The prudent point is that GST itself is part of the digitisation revolution, which along with the reforms on the information tax side in terms of the processes and operations, has the potential to broaden the tax base considerably,” said Patel.
With a four-rate structure, GST will be rolled out from the midnight of June 30 in a special Parliament gathering. Except Jammu and Kashmir, all the other states have passed enabling laws for its implementation.
“Expanding of tax base is an important outcome of the new uniform taxation regime and other initiatives on e-payments and digitisation,” he said.
“Besides the creation of a national market, GST will also reduce many inefficiencies within the states while moving goods from within a state and also across the country,” the governor added.
“You really come to know what works and what doesn’t when you go through a full cycle. The decision taken at an early stage can set important precedence on what is the right time and the wrong time. Therefore, caution in this respect is not unwarranted especially when you consider that the world is yet to recover even from the 2008 global financial crisis,” he said.