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Dec 03, 2019
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Tax revenues: Sequencing the GST reform
At last, after four months, the GST revenue has crossed Rs 1 lakh crore in November. That should bring in some cheer in an otherwise gloomy scenario. Of course, this too falls short of the monthly target of Rs 1.18 lakh crore, and immediate measures are needed to improve tax compliance. There are many stories making rounds about the ingenious ways adopted to create a parallel informal economy. Therefore, the time is opportune to identify reform areas to increase revenue productivity and minimise administrative, compliance, and distortion costs. It must be admitted that GST implementation has important positives. The most important gain is from the abolition of inter-state check-posts. It is estimated that the long-distance travel time for goods has reduced by almost 20%. The reform has also helped improve supply chain management by not requiring the creation of branch offices to avoid inter-state sales tax. Also, the abolition of inter-state sales tax has made the tax destination-based, and reduced inequitable inter-state tax exportation.
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