GST a complex tax & second highest tax as per World Bank

GST a complex tax & second highest tax as per World Bank :As per report of world bank, GSTis one of the most complex tax withsecond highest tax ratein the world among a sample of 115 countries which have a similar indirect tax system.

• Indias GST structure has five tax slabs of zero, 5%, 12%, 18%, and 28%.
• There are several exempted sales and exports which are zero rated sales.
• Exports allows exporters to claim refund for taxes paid on inputs.
• Separately, gold is taxed at 3% rate, precious stones at 0.25%, while alcohol, petroleum products, stamp duties on real estate and electricity duties are excluded from the GST and continue to be taxed by the state governments at state-specific rates.
• As many as 49 countries around the world have a single slab of GST, while 28 countries use two slabs, and only five countries, including India, use four non-zero slabs. The countries that use four or more slabs of GST include Italy, Luxembourg, Pakistan and Ghana. Thus, India has among the highest number of different GST slabs in the world.

State administrations have been experiencing disruptions in initial days after GST implementation. There are reports of an increased administrative tax compliance burden on firms and a locking-up of working capital due to slow tax refund processing. However world bank appreciated the fact thatthe benefits of the GST are likely to outweigh its costs in the long run. Key to success is a policy design that minimizes compliance burden, for example by minimizing the number of different rates and limiting exemptions, with simple laws and procedures, an appropriately structured and resourced administration, compliance strategies based on a balanced mix of education and assistance programs and risk-based audit programs

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