A key architect of India’s tax reforms and the chairman of the Thirteenth Finance Commission Vijay Kelkar has called upon the country’s next government to undertake urgent reforms in the “unnecessarily complex” Goods and Services Tax (GST) regime, such as switching to a single tax rate of 12% and sharing revenues with local governments and municipal corporations.
Mr. Kelkar has also mooted the creation of an independent secretariat for the GST Council, the apex-decision making body for the indirect tax rolled out in July 2017, as the current arrangement of the Union Government driving the secretariat may be considered problematic by States.
He termed the simplification of the GST structure, which has a “plethora of rates” and a compensation cess on some goods, as a “critically important fiscal reform” to take the GST regime to its most natural destination. Setting the tax rates “largely with the objective to maintain revenue neutrality”, as done by India, is “counter-productive”, Mr. Kelkar argued.
