The introduction of the Goods and Services Tax is undoubtedly a path-breaking indirect tax reform in the Indian history. A tax reform of this magnitude, in a country as large as India, operating under a federal structure, was expected to have teething trouble, but the response of the government and the GST Council in understanding and addressing these concerns through interim and medium-term solutions is laudable. Just as we complete a year into the GST era, the challenge continues for both policymakers and stakeholders especially around the technology front and the ease of compliance.
GST envisaged a reduction of cascading taxes with increased input tax credits in the value chain. Hence the law provided that such efficiencies are passed on to the consumer with a commensurate price reduction. Prices too have been kept under check through the strategic implementation of anti-profiteering provisions. For maintaining parity between the effective tax rate under the erstwhile regime and multiple tax rates under GST, rationalisation of the headline rate was undertaken.