It is almost one year since the implementation of GST (Goods and Services Tax) in the country back in July 2017, so it does call for a look at how the new regime is playing out.
We are using two reports for the assessment of GST, one released by the British brokerage firm, HSBC and the other by World Bank.
Although the HSBC report cited that over the long term, GST will lead to more formalization of the economy, one year into the action brought no result so far.
The GST regime was originally associated with formality. But so far, in our view, it has not been able to live up to that promise, nor has it brought down the demand for cash which has in fact only gone up.
HSBC report also claimed that the glitches in the one-nation-one-tax regime have increased the demand for cash.
Citing corporate sales data, the report further said the level of formalisation of the economy has gone back to the pre-note-ban levels, which is the complete opposite to what finance minister Arun Jaitley said in April.
INDIAN GST SYSTEM AMONG THE MOST COMPLEX IN THE WORLD: WORLD BANK
The Indian Goods and Services Tax (GST) system is among the most complex in the world with not only one of the highest tax rates but also one of the largest number of tax slabs, the World Bank has said.
It added that India has the highest standard GST rate in Asia, and second highest in the world after Chile.The tax rates in the Indian GST system are among the highest in the world. The highest GST rate in India, while only applying to a subset of goods and services traded, is 28 per cent, which is the second highest among a sample of 115 countries which have a GST (VAT) system and for which data is available.