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Goods and Services Tax for India

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  • R. Kavita Rao

    (NIPFP)

Abstract

Indirect taxes on goods and services at the state level constitute 85 percent of own tax revenue of the state governments of which sales tax alone accounts for 61 percent. A change in regime in recent times from cascading types sales taxes to taxes based on input-tax credit within taxation of goods, as well as the adoption of a uniform rates of tax, has resulted in buoyant revenues. However, the reform agenda is far from complete. The proposed GST regime constitutes the next step towards comprehensive reforms of indirect taxes in India. It would be the final step or a step in the right direction, depending on how the country chooses to define the constituents of this new regime. Decisions on the design of the proposed tax are not yet in the public domain. In this context, the objective of this paper is twofold : First, to identify the likely form of the proposed tax and the contentious issues that need a resolution before the tax can be implemented effectively. Second, given the importance of indirect taxes in the portfolio of the states, since any change would not affect all states uniformly, an attempt would be made to project the likely impact of one particular design of GST on states. While these estimates can at best be tentative, they will highlight the fact that the impact is differential across states and these differences would have to be taken into account in designing the proposed assignment of tax powers between the centre and the states.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number 22976.

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Date of creation: Jan 2008
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Handle: RePEc:eab:macroe:22976

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Keywords: India; Indirect tax; VAT; empowered committee;

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Cited by:
  1. M. Govinda Rao, 2010. "The Report of the Thirteenth Finance Commission conundrum in conditionalities," Working Papers 10/76, National Institute of Public Finance and Policy.
  2. M. Govinda Rao & Sen, Tapas Kumar & Jena, Pratap R., 2008. "Issues before the thirteenth finance commission," Working Papers 08/55, National Institute of Public Finance and Policy.
  3. M. Govinda Rao & Richard M. Bird, 2010. "Urban Governance and Finance in India," Governance Working Papers 21851, East Asian Bureau of Economic Research.
  4. M. Govinda Rao & Richard M. Bird, 2011. "Coping with Change: The Need to Restructure Urban Governance and Finance in India," IMFG Papers 04, University of Toronto, Institute on Municipal Finance and Governance.
  5. M. Govinda Rao & Sen, Tapas K., 2011. "Federalism and fiscal reform in India," Working Papers 11/84, National Institute of Public Finance and Policy.
  6. D K Srivastava & C Bhujanga Rao, 2010. "Reforming Indirect Taxes in India: Role of Environmental Taxes," Working Papers 2010-050, Madras School of Economics,Chennai,India.
  7. D K Srivastava & C Bhujanga Rao, 2010. "Reforming Indirect Taxes in India : Role of Environmental Taxes," Microeconomics Working Papers 23063, East Asian Bureau of Economic Research.

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