Confident of rolling out the Goods and Services Tax from July 1, Finance Minister Arun Jaitley on Wednesday said that the new tax regime is likely to lower the cost of commodities and also make tax evasion difficult.
Addressing the 23rd Conference of Auditors General of Commonwealth Nations and British Overseas Territories, he said the new indirect tax levy will also transform the complex indirect tax system to a simple system.
“GST will increase the volume of taxation, there is no tax on tax and therefore makes goods, commodities and services little cheaper and far more convenient,” Jaitley said, adding it will also act as a great check on tax evasion. “The laws which enable GST are now before Parliament which hopefully should get cleared and once they do get cleared then by the middle of this year we hope to see the implementation as far as this law is concerned,” Jaitley said.
His comments come soon after the Union Cabinet cleared four enabling legislations for GST on Monday. The Bills for Centre, Integrated and Union Territory GST along with the legislation for compensation are likely to be tabled in Parliament soon.
Note ban praised He also praised the decision to demonetise high value currency in November last year and said it will “act as disincentive to continue with shadow economy, will integrate informal with formal economy.”
Noting that the cash component of the economy was extremely high at about 12.2 per cent of the GDP, Jaitley said that India has been a largely non-tax compliant society.
“The tendency to deal excessively in cash did exist and this created its own challenges for the economy,” he said, adding that it also led to crime, corruption, incentivised tax non-compliance and was facilitator for funding terrorism and insurgency.
To further clamp down on cash transactions, the government in the amendments to the Finance Bill has also proposed to lower the cap for cash payments to ₹2 lakh.
“Demonetisation has also increased the trend towards digitisation of economy, it will act as disincentive to continuing to deal in a shadow or parallel economy and lead to a further integration of informal with formal economy,” Jaitley said, adding that India’s GDP in the near future will be bigger, size of formal economy will increase and will be cleaner.
The Minister also expressed hope that India would continue to remain amongst the fastest growing economies of the world.