Ahead of the roll out of the goods and services tax (GST), Asian Development Bank (ADB) described it as a very important step towards integrating the domestic economy. ADB has said that the new tax regime is a good initiative and a big achievement for the government but its implementation could bring some challenges for the government on account of several factors -especially its multiple tax rate structure.
ADB noted that businesses would be forced to think of adjusting prices to the new tax burden and the new tax burden will be reflected in the prices as businesses try to shift it to the consumer. Further citing challenges like filing of returns and its scrutiny, enforcement by state and central government tax officials and doing away with anomalies on input credit and output tax, ADB said that the arrangement should be very clear.
ADB, while talking about impact of GST implementation on growth, said that it is difficult to assess because impact is at different level and it is multi layered. Further, it said that multi taxes are going to be rationalised which will have positive impact on businesses. Cross trade transfer would be much simpler and for some industry and business, taxes would be lowered so it is very difficult to tell the impact.