GST to make India a $2-trillion economy: Pranab

July 23, 2010 01:37 am | Updated November 08, 2016 01:50 am IST - NEW DELHI

Finance Minister Pranab Mukherjee on Thursday said successful implementation of the goods and service tax (GST) can give a trillion-dollar boost to the economy, taking the total output to $2 trillion in a short span of time.

“The gain from GST will propel the country from one-trillion dollar economy to two trillion-dollar economy in a short span of time,” he said while addressing a meeting of the Federation Indian Chambers of Commerce and Industry of India (FICCI).

Mr. Mukherjee, who had on Wednesday proposed a three-tier structure for the new indirect tax regime, quoting an NCAER estimates said, “well designed GST will see an increase of 2 to 2.5 per cent in the GDP.” GST will subsume all the indirect levies like excise, VAT and local taxes.

At present, the gross domestic product (GDP), which is the sum of total goods and services produced in a year, is over $1 trillion (Rs 58.68 lakh crore).

The proposed GST, he told industry captains, would provide a level playing field to domestic producers besides stimulating the economy by removing tax distortions and tax competitions.

“The successful implementation of GST will create win-win situations for Centre-State, industry and consumers,” the Minister added.

Mr. Mukherjee had on Wednesday proposed a three-layer GST rates to the States — 20 per cent for goods, 16 per cent for services and 12 per cent for essential items. As per the formula, the Centre and States will share the revenue equally.

In the first year of GST (2011-12), the peak Central GST and State GST will be 10 per cent each, he said, adding the rates could be reduced to 9 per cent in the second year.

The effort, he added, reduce the CGST and SGST at 8 per cent each for goods and as well as services. “In a phased manner, we will be able to achieve a single CGST and SGST rate for both goods and services,” he said.

The Centre has already discussed the draft constitutional amendment bill with the state finance ministers, he said, adding, “we are looking forward to constructive suggestions from the empowered committee on this landmark legislation“.

Referring to the empowered group under UIDAI Chairman Nandan Nilekani for putting in place the IT infrastructure for GST, he said, this had helped the government in freezing “one of the critical elements for successful role out of GST”.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.