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Experts Urge Simpler GST and Lower Rates to Boost Competitiveness
Jayant Krishna says India should make its GST system simpler and gradually lower its rates.
A proposal would let businesses get refunds for some GST paid on machinery and services.
The machinery refunds would be spread over five years.
Krishna says this could leave businesses with more money available to run and grow their operations.
He expects capital-intensive manufacturers to benefit especially.
If businesses pass much of the savings on to shoppers, products could become more affordable.
That might encourage people to buy more and could help reduce inflation.
Krishna also says lower GST incidence could support compliance and consumption.
Jayant Krishna called a proposed expansion of GST refunds a welcome move.
The proposal would cover accumulated GST on capital goods over five years and on input services.
Krishna said the change could lower businesses’ GST burden and working-capital needs.
He said capital-intensive manufacturers could benefit, with possible gains for profitability and competitiveness.
If businesses pass substantial savings to consumers, Krishna said demand could rise and inflationary pressures could ease.
- Who
- Jayant Krishna, a senior fellow at the Center for Strategic and International Studies and former Group CEO of the UK India Business Council.
- What
- He urged GST simplification and progressively lower rates, and welcomed a proposal to expand refunds for GST paid on capital goods and input services.
- Where
- India.
- When
- Why
- Krishna said the changes could reduce businesses’ tax and working-capital burdens, improve competitiveness, and potentially support consumer demand and compliance.
Key facts
- Expert
- Jayant Krishna
- Proposed capital-goods refund period
- Spread over five years
- Refund coverage described
- Accumulated GST on capital goods deployed in plant and machinery, as well as input services
- Potential business effects
- Lower GST burden and working-capital requirement, with improved competitiveness and profitability
- Potential consumer and economic effects
- If businesses pass on substantial benefits, demand could rise and inflationary trends could ease to some extent
- Longer-term recommendation
- Move closer to global trends of reduced GST incidence, which Krishna said could improve compliance and increase consumption
Quotes
Jayant Krishna
Senior Fellow at the Center for Strategic and International Studies and former Group CEO of the UK India Business Council
“Eventually, India needs to move closer to the global trends of reduced incidence of GST which would also improve compliance besides increasing consumption.”
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Sources
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