GST will give a trillion-dollar boost to the Indian economy

Pranab-MukherjeeWith the booming achievement made by goods and service tax (GST), it is expected that Indian economy will rise by a trillion dollar. Earlier GST is contributing one trillion dollar to the Indian economy and it is anticipated that with in short span of time economy will reach to $ 2 trillion, said by Finance Minister Pranab Mukherjee on Thursday in the meeting of the industry chamber FICCI.

Mukherjee while quoting an NCAER estimates on Wednesday projected a three-tier structure for the new indirect tax regime. He said that GST will bring an increase in the GDP by 2 to 2.5 per cent. All the indirect levies like excise, VAT, local taxes etc will be counted in the GST only.

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

He also said that the proposed GST will provide a safe environment to the domestic producers and it also encourages the economy by eliminating tax alterations and tax competition.

Mukherjee also said that well designed GST will be beneficial for all the centre-state, industry and consumers.

Among the three tier GST structure proposed by Mukherjee for the states; 20 per cent is assigned for goods, 16 per cent is assigned for services and 12 per cent for essential items. As far as revenue is concerned it will be shared equally between the center and state.

It is expected that in the first year 2011-2012, central and state government will shared 10 per cent of GST equally but in the second year it will come down to 9 per cent. Further he added that CGST and SGST will be reduced to 8 per cent and if it continued in the designed pattern then CGST and SGST will be single for both goods and services.