Saturday, February 26, 2011

IT Infrastructure for GST prepared by Nandan Nilekani

Contrary to certain claims made by Opposition Ruled States, Particularly a recent claim by Gujarat Chief Minister Shri Narendra Modi who has opined that his state opposed the GST (Goods and Services Tax) initiated by the Ministry Of Finance, Government Of India because it needs an IT Infrastructure/Strategy in place. The Government Of India clarifies that the IT Infrastructure Plan for GST was already in place on July 21, 2010.
 
The broad IT plan for enabling GST was presented to the Government of India and the Empowered Committee of State Finance Ministers under the Chairmanship of Dr. Asim Dasgupta on  July 21, 2010. This document is a follow-up to that presentation and feedback thereon and describes the IT strategy for GST implementation.
 
GST can only be implemented when All the States in India agree on a common consensus to implement it.
 
The merits of GST
 
GST will bring about a change in the tax system by redistributing the burden of taxation 
equitably between manufacturing and services. GST will enable broadening of the tax base,
which will further result in reduction in effective rate of tax. It will reduce distortions by applying 
the destination principle for levy of taxes. It will foster a common market across the country, 
reduce compliance costs and promote exports. It can provide a fiscal base for local bodies to 
enable them to fulfill their obligations. It will facilitate investment decisions being made on purely 
economic concerns independent of tax considerations.

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