Describing the Goods and Services Tax (GST) as an ‘important step’, International Monetary Fund (IMF) on Thursday said it would boost India’s tax buoyancy and growth.

"India has recently taken important steps towards a national goods and services tax which, when fully implemented, promises to boost tax buoyancy and growth, including by enhancing the efficiency of the internal goods and services market," IMF said in a note on ‘Global Prospects and Policy Challenges’ released ahead of the G20 Summit in China.

India is preparing to roll out the GST from April 1, 2017.

The IMF note further said India’s high-frequency data suggest continuing strong growth, underpinned by private consumption.

Referring to government’s decision to set up a six-member Monetary Policy Committee (MPC) to decide interest rates, IMF said, "The recent formal adoption of a symmetrical inflation target by India should provide a robust institutional foundation for maintaining price stability." 

"Where inflation targeting frameworks are already established, improving the transparency of instruments and policy objectives can provide further assurance that contractionary shocks will be absorbed," it added.

As part of the new framework, the government has fixed an inflation target of 4 per cent (with range of plus/minus 2 per cent) which the MPC will have to keep in mind while deciding the interest rate.