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Why did World Bank call GST as world’s most complex tax?
Why did World Bank call GST as world’s most complex tax?
Do you know that World bank has mentioned GST as world’s most complex tax? World bank studied the tax system of 115 countries and concluded as such. Not only complicated, but World Bank also said that India has the second highest tax rate in the world.
You might have read it somewhere, most probably, at the time of GST introduction that GST would reduce the complexities of the tax system in India. But World Bank says that GST of India is most complicated tax system in the world.World Bank says such because of only one point. And the point is that Indian GST has five tax slabs.
World bank mentioned that 115 countries have tax regimes similar to India. Out of those only five countries have 5 or more tax slabs. The five nations are Italy, Luxemburg, Pakistan, Ghana, and India. 49 nations have a single tax slab, and 28 countries have two tax slabs.
If there are five countries with five tax slabs then how is Indian GST most complex?
The Indian GST got complicated because of input tax credit system (ITC). World bank says that matching of output and input invoices to get eligible for input tax credit has increased the compliance cost.
All said World Bank has commented
“The Indian economy s likely to recover from the impact of demonetization and the GST, and growth rate should revert slowly to a level consistent with its proximate factors - that is, to about 7.5% a year.”
That makes me think, perhaps “COMPLEX” is how we Indians spell “SIMPLE.”
