Underscoring the need for tax reforms in India, the US has said the proposed Goods and Services Tax (GST) is of paramount importance.
“Given India’s tremendous needs, its very low tax ratio, at 10 per cent of GDP, is notable. Accordingly, there is meaningful scope to address tax policy and compliance,” Treasury Under Secretary Nathan Sheets told a Washington audience yesterday.
“This is also where the pending Goods and Services Tax (GST) is of paramount importance,” he said in his remarks before the Carnegie Endowment for International Peace.
“The deadweight loss that flows from India’s states treating their internal boundaries as though they were international borders is apparent to all,” he said.
“The resulting inefficiencies include slow transit times, unnecessary red tape in tax administration and disruptions in the business climate. We support the government’s ongoing efforts to accomplish this important reform,” Nathan Sheets said in his appearance before this think-tank ahead of the next week’s visit of Union Finance Minister Arun Jaitley.
India and the US, he said are making progress on our bilateral tax issues. The US and India negotiated and signed a reciprocal intergovernmental agreement to implement the Foreign Account Tax Compliance Act, or FATCA, pursuant to which both countries will collect and exchange information about the financial accounts of their respective tax residents, he said.
This is an important tool to combat tax evasion in both our countries. In addition, the two countries will begin accepting applications for bilateral Advanced Pricing Agreements; this will benefit industries participating in cross-border business, he added.