A new nationwide goods and services tax (GST) will be rolled out from July 1 to create one of the world’s biggest single markets, make commodities cheaper and make tax evasion difficult, Finance Minister Arun Jaitley said.
Speaking at the 23rd Conference of the Commonwealth Auditor General, Jaitley said India has “hugely” a non-tax compliant society and the government banned higher denomination notes to curb the tendency of people to deal in cash that lead to tax evasion as well as terror financing.
He said the reform measures undertaken by the government will help India clock 7-8 per cent growth and retain the tag of fastest growing major economy in the world, but challenges remain in volatile global oil prices, reviving private sector investment and health of state-owned banks.
With regard to GST, he said the new indirect tax regime will ensure seamless transfer of goods and services and with stronger information technology backbone will make evasion difficult.
Despite being one political entity, India currently is not a single economic entity as there are multiple layers of taxation that make goods costlier. GST – first proposed in 2006 – will replace at last 17 state and central levies.
“The biggest taxation reform what 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 and therefore makes goods, commodities and services little cheaper and far more convenient,” Jaitley said.
The Union Cabinet this week cleared four supplementary GST legislations which will be introduced in Parliament in the ongoing budget session.
“The laws which enable this (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.
In terms of tax compliances, he said 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.
Jaitley, yesterday, in Parliament introduced an amendment to Finance Bill 2017 proposing to ban cash dealings above Rs 2 lakh.