24. Goods and Services Tax (GST): India Case Study

Evidence of a seamless fiscal federal goods and services tax (GST) with parallel centre–state channels is found first in a 2001 task force report for India’s Tenth Five-Year Plan. In his 2006 budget speech, the Indian finance minister announced his intention to introduce GST; a first expert report was submitted on 31 December 2007. A 13th finance commission subcommittee penned another report in 2009. Thus, experts played crucial roles. Subsequently, the parliamentary select committee on GST also issued a favourable report. On 20 December 2014, the then finance minister recognised GST as the ‘single biggest tax reform since independence’. A centre–state GST was introduced on 1 July 2017. Despite flaws, few countries have achieved a fiscal federal GST on this scale. This chapter analyses, on the policy side, Indian GST’s conceptual basis and design, revenue base, continuing evidence of cascading and needed corrections, and role and functioning of the GST Council, the centre–state policymaking body. On the administration side, it addresses GST’s success or lack to inculcate a customer focus, the management of inter-state trade under GST, the lack of much-needed software to auto-populate debit–credit links in the production chain, strategies to mitigate tax evasion and continuing incidence of litigation.