Once more revenue starts coming in, we can have lesser GST slabs, says Arun Jaitley

On Sunday, Arun Jaitley pointed out that India has conventionally been a tax non-compliant society but is now “slowly realising the virtues of greater compliance”.

By: ENS Economic Bureau | Faridabad | Updated: October 2, 2017 7:14 am
Arun jaitley, economy, GST, tax slabs, GST slabs, revenue, Finance minister, Goods and Services Tax, yashwant sinha, India economy, Customs, Indirect Taxes Meet, indian economy, narendra Modi, Union Minister of Finance and Corporate Affairs Arun Jaitley at the National Academy of Customs, Indirect Taxes and Narcotics (NACIN) Foundation Day and Passing Out Ceremony of 67th Batch of IRS (C&CE) in Faridabad on Sunday. (Source: PTI Photo)

Finance Minister Arun Jaitley on Sunday reiterated that there was scope for reduction in tax slabs under the Goods and Services Tax (GST), suggesting that once there is revenue buoyancy, the country would have “space for improvement to think in terms of bigger reforms such as lesser slabs”.

“We are in first two-three months (of GST implementation). We have almost by the day, space and scope for improvement. We have space for improvement and need for improvement to reduce compliance burden as far as small taxpayers are concerned,” he said. “We have space for improvement, eventually once we become revenue neutral, to think in terms of bigger reforms such as lesser slabs, but for that we have to become revenue neutral…,” he said, while addressing an event organised here by the National Academy of Customs, Indirect Taxes and Narcotics (NACIN).

Jaitley’s comments come against the backdrop of growing criticism of the early impact that the GST rollout has had on businesses, especially those in the small and medium segment. On Saturday, RSS chief Mohan Bhagwat asked the government to not allow informal sectors such as small and medium enterprises, self-employing cottage industries, and agriculture to suffer, and called for “sensitivity” and “efficiency” on the part of the administration in reaching benefits to the last man.

Former finance minister Yashwant Sinha has also voiced his concern regarding the impact of GST rollout on industry. “A badly conceived and poorly implemented GST has played havoc with businesses and sunk many of them, and countless millions have lost their jobs, with hardly any new opportunities coming the way of the new entrants to the labour market,” Sinha wrote last week in a piece in The Indian Express.

On Sunday, Jaitley pointed out that India has conventionally been a tax non-compliant society but is now “slowly realising the virtues of greater compliance”. “That’s one of the reasons why we have integrated most taxes into one and are in the process of establishing a chain,” he said.

He further said that when people have the right to demand for development, they also have “a responsibility to pay what is required for that development”. “Direct tax is paid normally more by the more affluent, somewhat by the others and certainly not by the weaker sections. But the impact of indirect tax places a burden on all, and therefore an effort is always made as part of fiscal policy to ensure that commodities that deal more, that are consumed more by the common people are in fact the least taxed compared to others,” the Finance Minister said.

Addressing the 67th batch of Indian Revenue Service (IRS) officers, Jaitley said that revenue is the lifeline of governance and all developmental activities. “You don’t have to extort taxes from those who are not liable to pay… As tax people, you are not entitled to invite fear, you have to invite respect that you are somebody who (wants) people to comply with national duty,” he said.

He also said that there aren’t any grey areas in taxation law and that it is the duty of a tax officer to be firm and fair.

In his article, Sinha had written that “raid raj” has become “the order of the day”. “Instilling fear in the minds of the people is the name of the new game.”

Earlier, while speaking in the Lok Sabha during a discussion in August, Jaitley had pointed out that there would be scope in the future for the two standard rates of 12 and 18 per cent under the GST regime to be clubbed into one, and that the government did not immediately have a single slab because its inflationary effect “would have been much higher”.

Under the current GST structure, goods and services are classified under four tax slabs of 5, 12, 18 and 28 per cent. Apart from this, an additional GST compensation cess is also levied on certain items.

with PTI inputs

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