Ease of Doing Business: No, it was not GST that made India break into top 100

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Published: November 1, 2017 12:09:14 PM

The implementation of the Goods and Services Tax, which is being touted as a landmark structural change in the country, was not the reason why India performed exceptionally well in the Ease of Doing Busines ranking.

The implementation of the Goods and Services Tax, which is being touted as a landmark structural change in India, was not the reason why India performed exceptionally well. (Image: Reuters)

India made a giant leap yesterday to secure a position in the top 100 countries in the World Bank’s Ease of Doing Business ranking 2018 for the first time. India even became “top ten improvers” among 190 economies this year by adopting and implementing as much as 37 reforms. And the reforms paid well, especially measures taken under the “Paying Taxes” category, which jumped 53 ranks pushing India’s overall ranking. But it was not the GST that led to India’s historic success.

The implementation of the Goods and Services Tax, which is being touted as a landmark structural change in the country, was not the reason why India performed exceptionally well under the “Paying Taxes” category.” In fact, the GST was not even taken into consideration, as the deadline for acknowledging reforms by the World Bank had already passed by the time the GST was implemented in July. So if not the GST, then what? It was the digitisation of Employees Provident Fund and simplification of corporate income tax regulations.

The World Bank, its 2018 edition of the ‘Doing Business’ report said,”In both Delhi and Mumbai, paying taxes was made easier by requiring payments to the Employees Provident Fund to be made electronically, and introducing administrative measures that make it easier to comply with corporate income tax regulations.”

India, which was ranked poorly on “Paying Taxes” front at 172 in 2017, jumped to 119 in 2018. The World Bank under this category takes into account the ease with which a country allows businesses to pay taxes. While it is being said that next year, when the implementation of the GST will be taken into consideration, India’s rank would improve, but it might not be the case. The technical glitches on GST Network have added to traders and businessmen’s woes. The GST Network is continuously running into snags due to the rush of filing invoices.

The government, time and again, has given assurances that the technical glitches are temporary and will be fixed, but if it is not fixed quickly, the GST may even end up hurting India in the next year’s Ease of Doing Business ranking.

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