India will be more appealing to multinational firms once GST (Goods and Services Tax) becomes a reality.

GST could boost India’s appeal to multi-nationals as a myriad of existing federal, state and interstate levies in the country had previously increased their tax burdens and barred them from further exploring potential in the world’s major economy. This reform will make them see India as a much better destination for investment and as an opportunity.

The complicated and cumbersome tax system in India as well as bureaucracy related to tax-collection remains a hurdle for firms doing business in India.

Once GST comes into effect, all central- and state-level taxes and levies on all goods and services will be subsumed within an integrated tax having two components: a central GST and a state GST. This will ensure a complete, comprehensive and continuous mechanism of tax credits. Under it, there will be tax only on value addition at each stage, with the producer/seller at every stage able to set off his taxes against the central/state GST paid on his purchases. The end-consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.