India to launch Goods and Services Tax (GST)

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Gain to manufacturers and exporters: the subsuming of major taxes in GST and reduction in transaction costs would lower the cost of locally manufactured goods and services and increase India's export competitiveness.

Lok Sabha Speaker Sumitra Mahajan and Vice President Hamid Ansari will also be on the dias along with the President, Modi and former prime ministers.

A minute after the stroke of midnight, President Pranab Mukherjee and Prime Minister Narendra Modi pressed the button to launch the new indirect tax regime on a digital screen with "GST" emblazoned on it in a golden hue. For India it will begin altogether a new journey.

Former prime ministers Manmohan Singh and H D Deva Gowda too have been invited to launch a new taxation system that is set to dramatically re-shape the over United States dollars 2 trillion economy. "GST is such a system which is easy, and will seek to stop black money and corruption, the Prime Minister added. It will be an India where the Centre and the states work together cooperatively and harmoniously towards the common goal of shared prosperity", he said.

"Though we have been in favour of GST, we believe there are pressing concerns, particularly among the small- and medium-level traders and manufacturing units, which remain unaddressed", he said.

The new matching system for businesses with their suppliers or vendors will affect many who previously had avoided their taxes.

I think GST can boost exports by making Indian goods competitive in global markets.

Minister of State (Development Ministry) Jitendra Singh said GST would be a "gamechanger in India's economic road map for the future".

All but the smallest of businesses will be required to declare their earnings online in an effort to broaden India's tax base while digitizing the country's economy and reducing the extent of the cash economy.

Mitali Nag: Manufacturing in India will get more competitive as GST addresses cascading of tax, inter-state tax, high logistics costs and fragmented market. "This historic moment is culmination of a 14-year-long journey", President Mukherjee said. To take its Mission GST forward, the CAIT has convened a meeting of its National Core Committee on July 7 at New Delhi.

The GST replaces a slew of indirect taxes with a unified tax regime.

For some businesses, the GST is complex with four broad tax categories and myriad exceptions as opposed to a simpler, flatter and broader sales taxes in other countries.

The state BJP leadership feels that such workshops will also be utilised to counter West Bengal Chief Minister Mamata Banerjee's charge regarding GST.

"There is an imminent threat of inflation and an all round increase in the prices of consumer goods". They should have at least had a trial run of GST network for minimum two months. Given this context, in the paper, "Optimal Taxation in a Federation and GST in India" (, this author and Trishita Ray Barman try to understand the short-term and long-term dynamic effects of this change to GST.