New Delhi, Aug. 28 -- A decline in the Goods and Services Tax (GST) rate has a higher multiplier effect of 1.08x compared with direct taxes, according to a report by Ambit Capital.

If the benefits of this cut are passed on to consumers, it can boost the country's GDP growth.

It stated "A decline in GST rate has a higher multiplier effect (1.08x) than direct taxes. If passed on to consumers, it can add 20-50bps to GDP growth".

The report said, a decrease in income tax rate would have a positive multiplier effect, leading to a rise in private consumption due to higher disposable income. But compared to income tax and corporate tax, GST has the highest multiplier effect because it is an indirect tax that applies to the entire population a...