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India’s Goods and Services Tax regime isn’t the disaster it is made out to be

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Simplicity and ease of compliance are what taxpayers primarily demand from a taxation system. India’s earlier indirect tax regime was often said to be fraught with problems. The task force set up by the 13th Finance Commission, for example, concluded that the system was “distortionary and inhibited voluntary compliance”. It was to address such concerns that the Goods and Services Tax was envisaged. It had long appeared inevitable; the only question was about the timing of its implementation. After all, the government was faced with the onerous task of subsuming 17 taxes under the GST. And given the number of taxes to be collapsed into a single regime, across states and the Centre, it was widely expected that the transition would not be effortless, or seamless. It would require a massive effort not only to garner consensus given India’s federal structure but also to reorient administrative and business practices. Nevertheless, the expected gains from simplification could only be reaped through such effort.

Today, a year and a half after it was rolled out, the GST is often criticised for its complex........

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