Bangalore: Industry body ASSOCHAM on Thursday said the Goods and Services Tax (GST), likely to be introduced next year, would lead to buoyancy in government revenues by Rs 1.5 lakh crore and increase the GDP by 1.4 to 1.6%.
With Indian economy integrating with world markets, manufacturers have to compete within and outside the country. To get a competitive edge, the introduction of GST would be a crucial reform to remove cascading of taxes, leading to reduction in prices of most manufactured goods by about 10%, it said in a release in Bangalore.
Sales staff at a jewelry shop wait for customers, in New Delhi. (File photo Bloomberg)
“Once GST replaces all multiple taxes, it is going to be the biggest tax reform in independent India’s history,” it said in a recent study titled ‘GST Beyond Growth.’
A simplified tax structure would lead to annual savings of Rs 1.2 lakh crore at the current nominal rate of GDP. Reduction in tax cost would lead to a favourable impact on tax compliance, economies of scale, supply chain efficiencies and thus higher economic growth, it said.
“The tax GDP ratio too may go up by 1.5 to 2% with net revenue jumping by Rs 1.5 lakh crore a year”, said the ASSOCHAM study.