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What would be India's GST Rate?
Jul 22, 2016

The Goods and Service Tax or GST bill is one of the most awaited legislations that investors are hoping will get passed in the ongoing monsoon session of the parliament.

GST has been a widely accepted concept and around 160 countries have implemented the same. So how do the rates across the countries looks like? Today's chart of the day, highlights the same.

Undoubtedly, a single tax replacing all forms of local taxes at the state and central levels has advantages. The bill helps in removing inefficiencies one witnesses in the form of the long queues of truckers at the border between states. The basic idea is to create a single, cooperative and undivided Indian market to make the economy stronger and powerful. This structure is likely to bring in structural changes that will benefit organsied players over the long run.

So theoretically there is no doubt that GST increases transparency. However, the real test of GST rests upon the way it is implemented.

As on a news website - The Wire highlights, the countries which failed proper implementation of GST ended with little or no benefit in terms of higher economic growth and lower inflation. While some saw increase in the inflation rate for the medium term as various new services and goods, earlier untaxed, began to be taxed, thus hurting the consumers.

We would wait to see more development on this front. But with no clarity on the quantum of benefits to accrue from GST implementation, stocks of some companies have seen sharp spike. It would make more sense for readers to the know the likely impact on a company rather than investing on the mere conjecture.

Data Source: SBI Daily Data Wrap

This Chart Of The Day was published in The 5 Minute WrapUp - Pokemon Go: Not a Game Changer for Investors

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