The Goods and Services Tax (GST) Bill, which was passed in the Rajya Sabha on Wednesday, will unify India’s tax architecture, make manufacturing efficient, boost the ease of doing business and usher in a virtuous growth cycle till 2050. A centralised tax system would make the launch of start-ups easier by creating a favourable eco-system, which would rest on centralised and standardised GST registration. The reduced compliance, level-playing field and streamlining of the tax system across all levels of production is expected to herald a new phase in the start-up culture in India.
As the ease of doing business improves, India’s attraction as a preferred investment destination is expected to get a boost. In the medium term, this will usher in a cycle of higher sustainable growth amid stable inflation.
This push at making India the global hub for manufacturing is likely to be underpinned by the supportive ecosystem that the GST will create. A favourable environment for supply chain, seamless movement of goods between states, lower compliance and improved manufacturing efficiency will foster higher growth in the manufacturing sector.
The formation of the Monetary Policy Committee (expected to be put in place by September), the passage of the Insolvency and Bankruptcy Code, and the GST Bill together not only fortifies India’s economic system but also prepares it for the next stage of economic take-off.
I strongly believe that the implementation of the GST will lead to efficient allocation of resources, end supply disruptions, harness inflation, aid tax buoyancy and improve compliance.
Rana Kapoor is MD & CEO, YES BANK & Chairman, YES Institute
The views expressed are personal