The International Monetary Fund (IMF) on Thursday suggested India to opt for a simplified rate structure, as, according to it, the multiple rate structure and other features could give rise to high compliance and administrative costs.
The GST, which was levied in India on July 1, 2017, is an indirect tax levied on the supply of goods and services.
“Yet, the GST has a complex structure with a relatively high number of rates (and exemptions), which could be simplified without sacrificing progressivity of the current GST and with potentially significant gains from lower compliance and administrative costs,” it said.
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“The multiple rate structure and other features of India’s GST environment could give rise to high compliance and administrative costs, it further said.
It further opined that a dual rate structure and an additional higher rate on select items can be progressive and preserve revenue neutrality.
A dual rate structure with a low standard rate and an additional higher rate on select items can be progressive and preserve revenue neutrality, while streamlining exemptions would further contribute to progressivity and reduce compliance and administrative costs, the IMF suggested.