'GST Doosri Azadi': GST an efficient system; will increase tax base, check evasion, says Finance Minister Arun Jaitley
Finance Minister Arun Jaitley today said that the Goods and Services Tax launched at midnight Friday was a reform that would end harrassment of taxpayers and will result in a more transparent and simplified system. The implementation of the GST, he said, was crucial for the economic development of the country. He was speaking to Editor-in-Chief Rajat Sharma at IndiaTV 's special event 'GST DoosriAzadi'.
Hailing the GST as a progressive reform, FM Jaitley also countered the argument that the GST launch was hurried and that the government should have waited for six months before undertaking this reform. "The launch of GST is belated, not premature. Its has been discussed and debated for 15 long years," Jaitley said responding to a question on the criticism of the opposition parties on the 'hurried' launch. "The principle of reform is that if you blink once, you can never go ahead with it," he added.
Jailtey also rejected the argument that though the GST was a game-changer, multiple rates under the new laxation system defeated the purpose. When questioned specifically by Rajat Sharma on a similar criticism by Biocon chief Kiran Mazumdar Shaw, Jaitley said he thought the argument to be immature. "Such arguments by intellectuals is bereft of any logic. These intellectuals have never seen poverty and thus do not understand," he said.
Explaining further, Jaitley said that the government has kept the items of daily usage under a lower tax bracket. "We could have fixed a common 15 per cent GST rate on all commodities. But it was necessary to bring down the prices of food items to help the poor," he said, adding that the rates levied on toiletries have been brought down from 28 per cent to 18 per cent. Jaitley also admitted that the GST Council did make some mistakes while fixing rates and that some of them have already been rectified. "Yesterday, we (GST Council) rectified a mistake and the GST rate on in fertilizers was slashed to 5 per cent to benefit the farmers," he said.
Interacting with the audiences, Jaitley also sought to allay fears regarding the impact on businesses, saying unease over the transition was natural but there was nothing to worry about. On criticism over some agitating traders, Jaitley said that the government was not going to bow to any pressure. "Many people think not paying tax is their fundamental right. This government refuses to buy this argument. You are using the roads and other amenities of the government... country and therefore this government does not believe in allowing not paying taxes," Jaitley said.
When questioned on the unease among traders, Jaitley said there was no reason to be worried. "Traders are not liable to pay tax. The tax ultimately is paid by the consumers. When the end consumers are ready to pay tax, why the traders are worried?" he said, adding that the real reason behind their worry was the fact that since the entire gamut of transactions for a business were going online, the trade volume would eventually increase and have a significant impact on their income tax. "An efficient system will help in increasing the tax base and check tax evasion," he said.
Jaitley also dismissed concerns over multiple compliance and the documentation that the GST would increase. "Businesses need to file only one return. They will have to file their return before 10th of every month for the transactions held in the previous month. GST will ease the process of finding defaulters," he said, adding that businesses registering a turnover below Rs 20 lakh are not subject to register under GST.
The FM also rued the absence of opposition parties, including the Congress, at the midnight launch of the historic reform. "Every Congress Chief Minister supported the GST. At the 18th GST Council meeting ahead of the launch, representatives from Congress ruled states were persent. The Congress party should have attended the GST midnight launch event," Jaitley said.
"I never knew that one political party held the monopoly over midnight," Jaitley quipped when told that the Congress was against the midnight launch of the GST and not the law per say. He further said that it was unfortunate that the principal opposition party country in the country had stooped to such a level where it was registering a protest on the time of day the GST is launched.
On the contrary, Jaitley appreciated other opposition parties, including Bihar Chief Minister Nitish Kumar, for supporting the GST, saying states like Bihar and Odisha knew that the GST was going to benefit them. "Both Nitish and Naveen Patnaik knew the GST is going to benefit them. Bihar is not a manufacturing state, its principal source (of revenue) is agriculture and such states will benefit from the GST," he said.
Jaitley further said that Nitish Kumar follows a political style and is known to take a stand based on his understanding. "During the last presidential elections, when the then opposition had proposed a nominee against Pranab Mukherjee, Nitish said he would support him despite being part of the NDA," he said. When questioned whether Nitish was growing closer to the BJP, Jaitley refrained from a direct answer, but said that the political styles of Nitish and his alliance partner and RJD chief Lalu Prasad Yadav are totally different.
Responding to querries from the audience, Jaitley said the Centre and some states were in favour of bringing petroleum, alcohol and real estate under the ambit of the GST, but some states were opposed to it. "Bringing petroleum under the GST will be beneficial for people. As far as petroleum products are concerned, we said that through Constitutional amendment we will bring it under the GST ambit. However, we decided to exempt it initially and let the states impose tax on these products. However, GST Council will take a final call when states are on board," Jaitley said. "On real state, the Delhi government supported bring the sector under the GST purview. We also support this."
The GST, India's biggest tax reform since Independence, was rolled out past midnight Friday at a gala event organised in the Parliament's Central Hall. A minute after the stroke of midnight, President Pranab Mukherjee and Prime Minister Narendra Modi pressed a button to launch the new indirect tax regime on a digital screen with "GST" emblazoned on it in a golden hue.
Conceived on the principle of 'one nation, one tax, one market', the tax that subsumes 17 central and state levies was launched in the presence of Vice President Hamid Ansari, former Prime Minister HD Deve Gowda, Lok Sabha Speaker Sumitra Mahajan, Finance Minister Arun Jaitley, MPs, chief ministers, state finance ministers, officials of the Centre and states.