Finance Minister Arun Jaitley yet again supported the Centre’s demonetisation drive after which lower middle class and middle class have suffered the most. On Friday he said, “Demonetisation shook the system for a short while, will integrate informal with formal economy in long run.” He added that most contentious issues on Goods and Services Tax are sorted out and the bill is at the final stages of implementation.
Demonetisation’s effect are long lasting according to many economic institutions like the International Monetary Fund, but if the GST bill is already on its way, it may save Bharatiya Janata Party in the the national elections after two years. The government plans to implement GST, which will absorb excise, service tax, VAT and other local levies, from July 1. The GST bill itself had to pass through various contentious issues especially at state-level, as many rejected the new indirect tax regime, admitting that they are not equipped yet to implement this scheme, on which assesees will be controlled by states and who would be governed by centre and also laws detailing compensation to states for loss of revenue in the first five years of the rollout and Integrated GST (IGST).
But on Friday Jaitley said, “most contentious issues regarding the GST have been sorted out between the Centre and states and the new indirect tax regime is at the final stages of implementation.” The bill has been boosted by many political parties including, BJP’s strongest opposition, Congress.
You May Also Like To Watch:
Addressing the CII Partnership Summit 2017, Visakhapatnam, January 27, 2017 https://t.co/IpNi551Ljl
— Arun Jaitley (@arunjaitley) January 27, 2017
Going by Jaitley’s speech at the CII Partnership Summit in Vishakhapatnam on Friday, the GST bill looks like it will become reality. Once the bill is passed there will only be a national-level central GST and a state-level GST spanning the entire value chain for all goods and services, with some exemptions.
Jaitley said, the demonetisation drive “shook” the financial system for a short while, but will integrate the shadow economy with the formal in the long run and ensure better tax compliance.” India is largely a tax non-compliant country, the states and the central government have struggled with their revenues to run the system which created an unfair enrichment in favour of the evader.
You May Also Like To Watch:
“It also becomes very unfair on the normal taxpayer because what the evader manages to evade is what the compliant has to pay more,” Jaitley said. It is therefore that the government decided to demonetise the high denomination currency, “which shook the system for some time, according to him.
After three months of demonetisation, according to him, the process of integrating the shadow, parallel and informal economies in far greater number with the formal economy, is gradually being possible. “The size of the formal economy is expanding, so are the transactions in the banking system and through the digital mode,” he said.
Propaganding the implementation of GST, the finance minister said new indirect tax regime will make India one single market, eliminate multiple assessments, check evasion and bring more revenues into the system.
“I am glad that almost all state governments have actively co-operated in making this a reality. Most of the contentious issues have been sorted out in the GST Council, a forum where you will see deliberative democracy in action. Those are now at final stages of implementation,” Jaitley said.