- GST will be inflationary, especially if the effective tax rate is higher than what prevailed before. For instance, Singapore saw a spike in inflation in 1994 when it introduced the GST. That makes it all the more important for administrators to keep tabs on how prices move after imposition of the tax.
- Government must iron out the glitches in the GSTN to smoothen the tax payment.
- It is important not to have too low thresholds. In fact, reasonably high thresholds will reduce the compliance burden to a large number of small businesses without much impact on revenue.
- Government should initiate extensive public education program.
- A successful GST is to have fewer rates. Having four tax rates and three rates of cesses should have been avoided. Multiple rates create classification problems, are harder to administer and would require the general rate of tax to be higher. It would also invite a lot of lobbying by special interest groups.
- European countries have one rate of GST as they do not have poor families, unlike in India, where families cannot be burdened with the same tax as the rich.
- Government should garner more support and inputs from the business community.
- The inclusion of petroleum products in the GST base can be considered.
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TESTIMONIAL BY UPSC 2017 TOPPER SIDHANT DAS