Prime Minister Narendra Modi today said the Goods and Services Tax (GST), which will replace a raft of different central and state levies, will strengthen growth efforts and make economy more predictable.
"GST (Bill), which has been passed recently, will further strengthen the way we are trying to accelerate growth and make the economy predictable," he said in his address to the nation from the ramparts of the Red Ford on the occasion of 70th Independence Day.
The Prime Minister also credited all political parties for passing a Constitutional amendment in the just concluded Monsoon Session of Parliament to bring a single unified value added tax system to turn the country into world's biggest single market.
GST, he said, is a tax that will bring equitable regime and turn the country into one market.
Parliament has passed the 122nd Constitution Amendment Bill to make changes in the power of the Centre to levy taxes like excise, and those of states to collect retail sales taxes.
Proposed a decade ago, GST is viewed as potentially transformative for India's economy that could add as much as 2 percentage points to the GDP, while improving the ease of doing business and encouraging investment in manufacturing. It is also expected to result in greater tax compliance, boosting government revenues.
GST will replace more than a dozen central and state levies, including central excise, service and sales tax as well as VAT on sale of goods and entry tax, to make movement of goods seamless across the 1.3 billion strong market.
Instead of the goods being taxed multiple times at different rates, under the new GST regime they would be taxed at point of consumption.
Modi said the series of steps taken by the government to reform regulations and law as well as change in approach towards doing business has led to appreciation of India's growth story by the World Bank, IMF, World Economic Forum and credit rating agencies.
India has made rapid improvement on the ease of doing business ranking and has emerged as a favoured destination for FDI, he said, adding that the country climbed 19 positions on the WEF ranking for logistics and infrastructure.
In an analysis, a UN organisation has predicted that India will climb to third stop from current 10th in global ranking in two years.
With PTI Inputs