On Thursday, the Reserve Bank Governor Urjit Patel said that to be implemented goods and services tax (GST) will not only create a national market but will also broaden the tax base which in turn will lower the overall taxes in the long-term.
“The prudent point is that GST itself is part of the digitisation revolution, which along with the reforms on the information tax side in terms of the processes and operations, have the potential to broaden the tax base considerably,” Patel said. He added that GST is a forerunner to a low tax regime in the country at a later stage.
The GST is to come into force on June 30 in all other states of India except Jammu and Kashmir. Besides creation of a national market, GST will also reduce many inefficiencies within the states while moving goods from within a state and also across the country, the governor said.
“You really come to know what works and what doesn’t when you go through a full cycle. The decision taken at an early stage can set important precedence on what is the right time and the wrong time. Therefore, caution in this respect is not unwarranted especially when you consider that the world is yet to recover even from the 2008 global financial crisis,” he said.
Patel added that even the country’s fintech industry has almost tripled its size since 2013 and the value of transactions has touched USD 30 billion already.
He also said enough focus or publicity has not been given to IndiaStack, which is a set of APIs that allows governments, businesses, start-ups and developers to utilise a unique digital infrastructure to resolve problems towards presence-less, paperless, and cashless services delivery.
The APIs which are part of IndiaStack are the UPI, the Aadhaar authentication, Aadhaar e-kyc, digital locker, digital user.
“IndiaStack is a game-changer in our macro fundamentals as financialisation of our savings continues. The most important and durable implication of this is going to be an increase in financial savings compared to where we are now,” he said.
Patel said IndiaStack can also help improve growth rates in the future and its full implication will come in short to medium-term.