July 1 (Reuters) - India early on Saturday introduced its biggest tax reform in the 70 years since independence from British colonial rule.
The Goods and Services Tax (GST) replaces more than a dozen federal and state levies, unifying a $2 trillion economy and 1.3 billion people into one of the world’s biggest common markets.
As the GST is a value added tax, firms will have an incentive to comply in order to avail credit for taxes already paid. This should widen the tax net, shoring up public finances.
India currently has one of the worst tax-to-GDP ratios among major economies at 16.6 percent, less than half the 34 percent average for the members of the OECD and also below many emerging economies.
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EARLIER: >Ready or not, Indian businesses brace for biggest-ever tax reform >INTERVIEW-India ready for GST, anti-profiteering rules soon-Adhia >India's GST launch spawns tech cottage industry for compliance >BREAKINGVIEWS- Modi's India can ride out giant tax reform >No excuse for firms not to be ready for India's GST - Jaitley >India to allow late filing in first two months of GST - Jaitley GRAPHICS and MULTIMEDIA >India's GST launch tmsnrt.rs/2sykyGP >Indirect tax rates in the Asia-Pacific tmsnrt.rs/2tiEEnZ >Facebook Live - GST launch reut.rs/2u6AA8b (Compiled by Malini Menon in NEW DELHI)