Is gst india’s biggest economic reform

Is gst india’s biggest economic reform

Some speculate that the goods and services tax (GST) has been India’s biggest piece of economic reform. Without doubt, it is a very major reform. In fact, it has been the most complex reform to achieve: it called for the Constitution’s division of the tax base between the Centre and the states to be amended, calling for virtual political consensus across the federal divide and the political spectrum.
With GST, the Centre taxes retail sales of goods and states tax services. No sale suffers tax merely because it happens across state boundaries. To make these changes, the Constitution had to be amended. But the GST could not happen or would not matter even if it happened, if a series of economic reforms had not happened before it.
India’s GST is the first value-added tax to work entirely on an information technology and communications infrastructure.
It takes ubiquitous computing and broadband access for granted. Invoices and returns have to be uploaded to the GST Network, where software will reconcile taxes paid on inputs with claims for credit for such taxes or reject them or even penalise them. The billions of records that billions of transactions amongst 1.3 billion people within the country and by them with those outside the country will automatically get processed. India today has the information technology capability to make this happen.
The reforms that made this possible go back to the decision to set up institutions of excellence in higher education in the 1950s and 1960, and to break the insularity of a protected economy in the 1980s and bring in computers. The liberalisation of 1991, unleashing long dormant animal spirits, the subsequent introduction of private enterprise into telecom services and the gradual removal of shackles on its expansion built the communications network GST rides on. If the states had not implemented value-added tax, they would have baulked at GST.
It is best to view GST as another milestone in India’s reform journey. India has a long way to go, before poverty and ignorance and disease are banished and people set free to realise their potential.