NEW DELHI: The midnight launch of the Goods and Services Tax (GST), the biggest tax reform since independence, catapults India into a select league of nations that have a national sales tax.
Amid boycott of the launch ceremony by principal opposition parties like the Congress which termed it as “tamasha” (gimmick), the new tax regime overnight replaces the messy mix of more than a dozen state and central levies built up over seven decades.
The one national GST unifies the country’s USD 2 trillion economy and 1.3 billion people into a common market, an exercise that took 17 tumultuous years.
The GST will eliminate the compounding effect of the current multi-layered tax system as well as the cross-state tax heterogeneity by fixing the final tax rate. It is expected to lower the average tax rate on manufactured goods and make them uniform across states by fixing the final tax rate.