Several experts have suggested that India should do away with multiple tax slabs under the Goods and Services Tax (GST) for greater ease of compliance, following the Singaporean tax model.
Singapore has only one tax rate under GST - seven per cent - on taxable goods and services while India has multiple slabs of the indirect tax for different commodities and services.
To avoid confusion and for greater ease of compliance, India should aim for a two-rate system over time to be in line with global best practices, Insitor Partners, a consultancy firm on GST, stated in a report.
Singapore's practice of early announcement of GST rates for various categories would help in a smooth transition, it added.
Singapore's Finance Minister Heng Swee Keat in his budget 2018 speech announced that there are plans to increase GST from 7 per cent to 9 per cent sometime between 2021 and 2025, according to the Inland Revenue Authority of Singapore (IRAS).
However, finance and legal experts also said that while other countries have considered a single rate of GST, keeping in mind the vast gap in per capita income and the need for generating revenues, it may not be possible at this stage for India to consider it.
“However, India should endeavour to move towards least tax slabs possible, of 6 per cent and 14 per cent,” sources said.