Summary of India's Tax Reform

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India's Tax Reform summary
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In a historic tax overhaul, India seeks to standardize tax rates for the first time across the country’s 36 states and territories. From afar, India’s motto of “one nation, one tax” makes a lot of economic sense. But as political economist Praveen Chakravarty writes in Foreign Affairs, the new tax code in its current form isn’t sustainable, considering the country’s political, demographic, social and economic realities.

In this summary, you will learn

  • What India’s tax overhaul seeks to accomplish and

  • Why a unified tax code could weaken India’s political union.

 

About the Author

Praveen Chakravarty is a senior fellow at the IDFC Institute, a think tank in Mumbai.

 

Summary

Representatives from India’s 36 states and territories met over the course of 10 months in 2016 and 2017 to hash out a new tax structure that would apply to the entire country. They sought to unify the tax code to facilitate trade among India’s territories and promote economic efficiency and growth. India’s Goods and Services Tax (GST), unveiled in June 2017, reduced the number of tax rates from more than 1,000 to 6. Rates vary according to the type of good or service; the tax rate is lower for necessities and higher for luxuries. The latest technology makes possible tax collection at the point of consumption within India’s $2 trillion economy.


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