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The Modi Masterstroke: How GST unified India

The Congress sat on the GST for years and did nothing. In contrast, the Modi govt both implemented this path-breaking reform and kept improving it, to benefit the common citizen in multiple ways.

July 1, 2019, marked the second anniversary of the Narendra Modi-led government's landmark indirect tax reform — Goods and Services Tax (GST), which is based on the premise of ‘One Nation One Tax’, which makes India a unified common market. It is a single destination-based multi-stage tax on the supply of goods and services — right from the manufacturing to the consumption stage. Credits of input taxes paid at each stage are available in the subsequent stage of value addition, which makes the GST essentially a tax only on value addition at each stage.

It is indeed the Input Tax Credit (ITC), besides a whole host of other progressive moves, which make the GST — as we know it in India — superior to any other consumption-based or Value Added Tax in any other country. 

For example, GST was implemented in France for the first time in 1954 with the , largely speaking. It came into being in (with the current rate being at 15%) which is applicable to all purchases, but there is no GST on residential rents and financial services. GST was initiated in Singapore at and is now 7%. In Indonesia, imports are subject to both , but most exports are exempted from GST. , while in , the average VAT for most other items is , with an additional cess on inter-state supplies at . There are some items that also attract a ridiculous rate of as high as , as part of the IPI. 

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