The Narendra Modi government seems determined to walk the talk on reforms. The ambitious Goods and Service Tax (GST) legislation, which seeks to replace a slew of often complex state-level levies with one unified pan-Indian tax, can, according to experts, add as much as two percentage points to GDP growth rates.
How? Right now, India is not a common market. For example, an auto maker in Tamil Nadu wishing to sell cars in Delhi will have to transport cars all the way up the length of India. As the cars pass through the four or five states on the way, the company has to pay taxes in every state before finally arriving in Delhi, where it will have to pay state-level taxes. This drives up the price of the finished goods. Inefficient and non-transparent procedures lead to corruption - transporters say they pay as much as Rs 6,000-10,000 ($100-160) per trip as bribes to state-level inspectors who harass them on petty charges.
How? Right now, India is not a common market. For example, an auto maker in Tamil Nadu wishing to sell cars in Delhi will have to transport cars all the way up the length of India. As the cars pass through the four or five states on the way, the company has to pay taxes in every state before finally arriving in Delhi, where it will have to pay state-level taxes. This drives up the price of the finished goods. Inefficient and non-transparent procedures lead to corruption - transporters say they pay as much as Rs 6,000-10,000 ($100-160) per trip as bribes to state-level inspectors who harass them on petty charges.
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