Mukul Asher elaborates the GST Bills intention to address the current issue of tax evasion by expanding the tax base and reforming the existing Direct tax policies, in a conversation with the CEO and Founder of Jan Ki Baat, Pradip Bhandari. Asher points out that efforts have already started by the Modi government to widen the tax bracket and it would take a year or two for its fulfilment. The GST rate, if high, may cause inflation but of a milder degree.
Any tax design consists of two factors: the base on which the tax will be levied and the tax rate, both these depend on the economic situations and policy objectives of the nation. Asher notes that the government is to retain its flexibility and work with the public consensus to determine the tax rate. This rate is to be derived from what is required to sustain Indias competitiveness in global market; Asian nations have 10-12% as their rate while the OECD rate is 18.6%. Asher remarks that 18% or less is a reasonable compromise for India, which has just started in this direction. The Parliament should now focus on interstate movements of goods and services and ensure the user-friendliness of its mechanism.
The goal of GST is to unify internal market units and reduce logistics and supply-chain costs, something that the Bill is ready to tackle with. It seeks to rise above the current distorted tax schemes to build a new system that is favourable to both the citizen and the governments interests.
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