The article goes into detail regarding the issues regarding an indirect tax reform system. It shows that India has had problems implementing a free trade agreement with itself and even that so for years. A recent World Bank report shed light on how corruption in India's bureaucracy system has lead to its long distance truckers to be parked 60% of their time. A recent proposal to harmonize the system has been has been introduced in a form of a goods and services tax (GST). This proposal has been around since 2007, but the recent regime change has made it a center piece for moving forward.
A well designed GST would essentially give a boost to manufacturing and limit corruption and furthermore make India a true common market. A sin charge of extra tax on Alcohol petrol and tobacco would be implemented. In terms of politics the government must secure an agreement of 29 states to implement a common rate. The states must essentially give up their power on implementing taxes. Many worry about the loss of income as indirect taxes are a big chunk of state revenue. But in terms of exceptions many worry if too many are made the GST might just become the new solution with a mere different name.
Source:
http://www.economist.com/news/finance-and-economics/21631147-fix-indias-indirect-tax-system-overdue-it-may-fall-short
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