India’s GST is so complex, its a joke

 

And that is not my opinion, it is of the World Bank.  Their annual India development report paints a fuzzy greyish image of India’s  financial governance, not too patronizing, but not too harsh either. Here is the graph:

 

Its very weird seeing India featuring on the wrong side of the graph, while all the developed countries have a lower rate !!

The World Bank’ report provides that 49 countries employ single tax slab of GST, 28 countries use dual tax slab of GST, 5 nations including India apply four non-zero slabs of GST and rest of the countries (in list of 115 countries) enforce four or more slabs of GST. It was detected that as a consequence of the GST, firms are forced to bear increased administrative costs at a burdensome rate and the snail process of tax refund caused the firms to lock up the working capital.

The reason for high compliance costs is the prevalence of multiple tax rates mandating the firms the necessity to classify inputs and outputs based on the applicable tax rate.

Unfortunately, its already too late. They cannot make the system easier by adding more rules. Moroever , it is now a matter of political pride for the incumbent government to maintain the new rates system.