GST will not lead to rise in inflation, will benefit small businesses, says Hasmukh Adhia
The government on Saturday swayed concerns that the Goods and Services Tax (GST) would lead to higher inflation if businesses do not pass on the benefits to consumers saying that the competition itself will take care of any disparity in prices. Speaking at ‘GST Doosri Azadi’, India TV’s conclave on GST, Revenue Secretary Hasmukh Adhia said, "Competition will take care that this does not give way to inflation." He was responding to a question if traders' refusal to pass on the benefits of lower taxation under GST would cause rise in inflation.
The IAS officer at the head of GST implementation said the reform will being transparency on the tax being payed on each product. "Presently, most of the consumers are not aware of the amount of tax being paid on each product, Now there will be a transparency on the tax being payed on each product, which is one benefit of the GST," Adhia said.
Highlighting other benefits, Adhia said the new tax regime will work in favour of small traders as businesses with a turnover of less than Rs 20 lakh are not required to register. The amount was Rs 10 lakh under the Value Added Tax (VAT).
"Businesses with a turnover of over Rs 10 lakh were required to pay taxes under the VAT but under the GST, that limit has been raised to Rs 20 lakh. Over 20 lakh businesses will benefit due to this," he said.
Adhia said manufacturers face competition from other countries today and they also had to pay VAT.
He said the GST will curb tax evasion as there are strong provisions to perevent such activities.
"Defaulters who do not show their correct turnover will be held, there are provisions for the same," he said.
On Opposition's charge that the new taxtion system is "imperfect" as it has 5 slabs, Adhia said the government had to keep 5 tax slabs under GST to ensure that price of essential products do not rise further.