GLOBAL LESSONS FOR INDIA'S GST REFORM: PERSPECTIVE ON SHIFTING INTO TWO SLABS

The Goods and Services Tax (GST), introduced in India on 1st July 2017, represents one of the most significant reforms in the indirect tax system, aimed at creating a unified market, improving compliance, and enhancing revenue collection. However, its multiple slab structure has raised concerns regarding complexity, administrative burden, and uneven impacts across sectors. This study aims to examine the decision of the Indian Government to restructure India’s GST into a simplified two-slab framework, drawing comparative lessons from international experiences. Countries such as Indonesia, Croatia, Serbia, Russia, Romania, and Senegal have undertaken reforms by reducing the number of VAT/GST slabs, which have contributed to greater tax efficiency, better compliance, and more transparent fiscal relations. In some cases, short-term revenue instability has been observed. From the perspective of other countries, India’s transitioning to two slabs has the potential to reduce classification disputes, strengthen Centre–State fiscal coordination, and improve the ease of doing business, while safeguarding revenue through a broad tax base and effective enforcement. The study concludes that while global experiences highlight the efficiency and transparency gains from simplification, India’s large and diverse economy requires a carefully calibrated transition, accompanied by strong institutional mechanisms and targeted compensatory measures to ensure both equity and fiscal stability. Keywords: Goods and Service Tax, Slab structure, International Experience, central-state relationship