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Soumik Dey
Soumik Dey

GST

Implementation of GST will make tax evasion tough: Jaitley

arun-jaitley-gst-pol-dif (File) Finance Minister Arun Jaitley

The implementation of Goods and Service Tax could make goods cheaper for consumers after July 1, Finance Minister Arun Jaitley said.

Addressing the Conference of Auditors’ General of Commonwealth Countries and British Overseas Territories in Delhi, he said, “The biggest taxation reform that we are trying to implement from July 1 is Goods and Services Tax. It will increase the volume of taxation. There is no tax on tax, therefore it makes goods, commodities and services little cheaper and far more convenient.”

The GST Council had recently okayed all four draft legislations and sent them to Union Cabinet for its final nod. The Cabinet promptly cleared the four supplementary GST legislations which are to be introduced in parliament in the ongoing budget session.

“The laws which enable this (GST) are now before parliament. Once they get cleared, then by the middle of this year we hope to see the implementation as far as this law is concerned,” he said.

Jaitley said India's growth momentum will continue to be reasonably well at seven to eight per cent rise in GDP this year, and added that there are also prospects for an even higher growth if the global economy picks up.

In terms of tax compliance, Jaitley noted that India ranks fairly high as a non-compliant state. “Therefore, one of the efforts of the state has been how to bring non-compliance to an end. Once the GST is introduced it will be a great check as far as evasion is concerned,” he said, adding that the government has amended direct taxation law by bringing in curbs on cash currency.

On Tuesday, the minister introduced an amendment to Finance Bill 2017 in parliament, proposing to ban cash dealings above Rs. 2 lakh.

“Cash component of Indian economy was exorbitantly high—about 12.2 per cent of GDP and of this, 86 per cent was high denominational currency and therefore the tendency to deal excessively in cash did exist and this created its own challenges for economy,” he said, defending the government's November 8 move to demonetise high denomination notes.

Highlighting that the move had subsequently led to a higher transparency, Jaitley said, "Anonymity was attached to this high level of cash operating in the market. That anonymity disappeared as money had to be deposited in a bank."

"This has also increased the trend towards digitisation of the economy and will act as a disincentive to continuing to dealing in the shadow or parallel economy," he said, indicating that the move could shrink the size of India's large informal economy.

India's GDP, Jaitley said, will have long-lasting impact from demonetisation, which will also make the economy cleaner.

As regards India's growth, Jaitley said India would continue to remain amongst the fastest growing economies of the world. “For the last three years, we have been the fastest growing major economy. We will continue to be in that phase. I think for India to achieve the growth rate of seven to eight per cent is reasonably logically plausible,” Jaitley said.

He said the tax department is trying to make the I-T (income tax) backbone stronger to make evasion difficult for taxpayers. This, he said, will reduce the workload of the tax department to only a limited number of scrutinies.

The minister said the government is now focused on reducing the problems of the public sector banks and trigger private consumption to bring the economy back on track. “We are hopeful that the next few quarters will probably see a better result as far as those areas are concerned,” he said, adding oil prices remain an uncertainty for India.

This year's conference is being hosted by the Comptroller and Auditor General (C&AG) of India.

"This Conference will provide a platform and opportunity for all the Supreme Audit Institutions to meet and share their experiences and discuss the key issues faced by them in the area of public audit," said Comptroller and Auditor General of India Shashi Kant Sharma.

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Topics : #GST | #Arun Jaitley

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