On 1 July 2017 India rolled out the Goods and Services Tax (GST). It collapsed 36 tax jurisdictions and consequently for the first time India was economically unified. Further it all but eliminated the cascading effect of taxes that prevailed in the earlier regime of indirect taxes.
Indeed, it was the biggest tax reform ever. Nearly, a decade later, the country has few regrets. Yes, GST is still a work in progress. Yet it has more than matched expectations.
Now, a new academic paper has empirically proved the long-held belief that GST is accelerating formalization of the Indian economy. Even better, this makeover has not been achieved by the fear of the taxman. Instead, it is because of the GST design India chose.
To unpack these findings, StratNews Global spoke to the author of this study, Megha Patnaik, Assistant Professor at Luiss Guido Carli University and co-founder and, Leap Insights Foundation on Capital Calculus.
