India’s GST highest, most complex in world: WB

Hyderabad: The Goods & Services Tax (GST) introduced by the central government amid much fanfare on July 1, 2017 received a big thumbs-down from the World Bank with the global financial institution rating GST rates in India among the highest in the world and the new indirect tax system most complex among 115 countries.

“Comparing the design of India’s GST system with those prevailing internationally, we note that the tax rates in the Indian GST system are among the highest in the world,” the World Bank said in its latest report titled ‘India Development Update: India’s Growth Story”, released in New Delhi on Wednesday. 

The top GST rate of 28 per cent is the second highest “among a sample of 115 countries which have a GST (VAT) system and for which data is available”, it said. The report also revealed that India has the highest standard GST rate in Asia. While Taiwan-China has a highest rate of just five per cent – nearly six times lower than India, Philippines and Malaysia levy 12 per cent and six per cent respectively.

The World Bank also described the Indian GST system as most complex one. “Most countries around 
the world, have a single rate of GST: 49 countries use a single rate, 28 two rates, and only 5 countries  including India use four rates,” it explained. 

The other countries that use four or more rates of GST include Italy, Luxembourg, Pakistan and Ghana. “Thus, India has among the highest number of different GST rates in the world,” it pointed out. With five different tax rates, Ghana has the highest number of tax slabs globally. 

Comparing the design of India’s GST system to similar taxes across other countries, the GST system in India is relatively more complex, with its high tax rates and a larger number of tax rates, than in comparable systems in other countries, the report noted. 

However, the global financial institution still described the new indirect tax regime as a historic reform. “While teething problems on the administrative and design side persist, the introduction of the GST should be considered as the start of a process, not the end,” it observed.