PTI
New Delhi
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, while 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 session. “The laws which enable this (GST) are now before Parliament which hopefully should get cleared and once they do, then by the middle of this year we hope to see them implementated,” 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, on Wednesday, in Parliament introduced an amendment to Finance Bill 2017 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,” he said.
Cash facilitated crime, corruption, incentivised tax non-compliance and was facilitator for funding terrorism and insurgency, he said, as he defended the decision of the government to demonetise 500 and 1,000 rupee notes.
“Anonymity which was attached to this high level of cash operating in market has disappeared as it had to be deposited in the bank. This has increased the trend towards digitisation, and will act as disincentive to continuing to deal in a shadow or parallel economy and lead to further integration of informal with formal economy,” Jaitley said.
