Need to simplify GST and reduce cess: Ex CEA Subramanian

PTI New Delhi: India's GST regime is very complicated and there is a need to simplify this biggest indirect tax reform introduced in 2017, former Chief Economic Adviser Arvind Subramanian said on Friday. "GST regime is very complicated. There are 50 (different) cess rates and if I look at other things... it might go up to 100 rates," he said at the event organised by the Centre for Policy Research here. Talking about other challenges, he said, some people have pointed out to me that the goods and services tax (GST) has encouraged excessive tax demands. Observing tax terrorism and excessive demands were always features in the Indian system, he said, these have gone up under the GST.

Tax terrorism that GST has introduced is something that needs to be focussed on, he added. Emphasising the need for rate rationalisation, he said there is a need for GST simplification and increased revenue. GST was rolled out on July 1, 2017 heralding the start of 'One Nation, One Tax, One Market'. It subsumed at least 16 indirect taxes and cesses that previously existed in India, administered separately by the Centre and states, resulting in a greatly rationlised taxation structure. He exuded confidence that economy shows resilience underpinned by steady demand and strong manufacturing and service sector activity. Talking about other bright spot, he said, labour market shows signs of growth, with an easing unemployment rate and expanding formal workforce, with notable increases in manufacturing jobs and a strong inflow of youth into organised sectors.

Better growth in labour incomes holds the key to sustained demand growth and capital formation in the private sector, he said, adding, global crude oil prices remaining low, bodes well for economic activity and price stability. India's economic growth slowed to near two-year low of 5.4 per cent in the July- September quarter of this fiscal due to poor performance of manufacturing and mining sectors as well as weak consumption. The gross domestic product (GDP) had expanded by 8.1 per cent in the July- September quarter of 2023- 24 fiscal and 6.7 per cent in first quarter of current fisal April-June 2024).