Here is some food for thought for people who are opposing the VAT regime. People might be amazed to know that India has the highest indirect tax rate as found in a recent survey by Ernst & Young.

The cummulative effect of VAT (12.5 %) and Excise duty (16.32 % ) comes out to more than 30 % assuming that there is no cascading effect of taxes which generally do happen do to gaps in the credit rules. Other countries having high indirect taxes are Denmark, Hungary, Norway and Sweden ( a close to 25% ). Countries like Singapore and japan have ‘Goods and Services Tax’ which is only 5 %, observing a lowest indirect tax structure.

So, I personally believe that we should press for a quicker transformation to GST to give India Inc a much needed boost.

Madhur Khandelia

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