Saturday 18th, November 2017
canara news

GST will boost revenue, positive for Indian credit profile: Moody's

Published On : 03 Jul 2017


New Delhi, (IANS) The just effected Goods and Services Tax (GST) regime in India is positive for the country'scredit profile as it would increase government revenues through improved tax compliance, US ratings agency Moody's said on Sunday.

"It (GST) will support higher government revenue generation through improved tax compliance and administration. Both will be positive for India's credit profile, which is constrained by a relatively low revenue base," Moody's Investors Service Vice-President (Sovereign Risk Group) William Foster said in a statement.

"We expect improved tax compliance to be driven by: (1) incentivization of tax credits in a GST system; (2) greater ease of compliance through usage of a common, shared IT infrastructure between the central government and the states; and (3) a reduction in the overall cost of compliance from simplified tax rates, uniform across the country," he said.

"We expect the net impact of GST on government revenues to be positive," he added.

Over the medium term, the American agency expects that the GST will contribute to productivity gains and a higher GDP growth by improving the ease of doing business, unifying the national market and boosting India's attractiveness as a foreign investment destination.

GST, which came into effect from July 1, will replace 17 taxes and 23 central and state cesses into a single national tax. The movement of goods will become much simpler across the country and may become cheaper, replacing the current system, where a product is taxed multiple times and at different rates.

At the state level, the taxes that GST will subsume include state cesses and surcharges, luxury tax, state VAT, purchase tax, central sales tax, taxes on advertisements, entertainment tax, all forms of entry tax, and taxes on lotteries and betting.

Central taxes being replaced by the GST are service tax, special additional customs duties (SAD), additional Excise duties on goods of special importance, central excise, additional customs duties, excise on medicinal and toilet preparations), additional excise duties on textiles and textile products, and cesses and surcharges.

There are four tax slabs of 5, 12, 18 and 28 per cent giving India's GST a multiple rate structure, unlike elsewhere, which could pose challenges in implementation. Besides, this destination tax has a dual jurisdiction system of both the Centre and the states, which could pose further hurdles to its smooth administration.







More News

Sensex zooms 414 points after Moody's ups India rating
Sensex zooms 414 points after Moody's ups India rating
Indian firms fast embracing Microsoft 365 for modern workplaces
Indian firms fast embracing Microsoft 365 for modern workplaces
Flipkart picks Smartron to design, engineer its first smartphone
Flipkart picks Smartron to design, engineer its first smartphone

Write your Comments

Disclaimer: Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. canaranews.com will not be responsible for any defamatory message posted under this article.

Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on CANARANEWS to provide the IP address and other details of senders of such comments, to the authority concerned upon request.

Hence, sending offensive comments using canaranews will be purely at your own risk, and in no way will canaranews.com be held responsible.