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Tax base set to widen significantly due to GST rollout: Arun Jaitley

LiveMint logoLiveMint 01-08-2017 Gireesh Chandra Prasad

New Delhi: Finance minister Arun Jaitley said on Tuesday the country’s tax base is set to widen significantly as a result of implementing Goods and Services Tax (GST), bringing more tax receipts to the exchequer, which will also benefit states.

In his address to Lok Sabha members during a discussion on supplementary demands for grants for 2017-18, Jaitley said that in addition to GST levied on supply of goods and services, which is split between Union and state governments equally, states are also entitled to 42% of Centre’s divisible pool of taxes.

Since GST will increase tax compliance and result in better reporting of sales of businesses and traders, it is expected that the number of income tax payers will also go up. The finance minister said that any expansion in direct tax base will benefit states.

Jaitley said that 7.2 million of the 8 million indirect tax assessees under the earlier tax system have migrated to GST, while 1.3 million new tax payers have also signed up under the new system, indicating the tax base is set to widen significantly by the end of the year.

The GST Council has been very responsive to suggestions made by states and the industry in calibrating the tax rates. The Council, which is set to meet on 5 August, will regularly meet every month to “see where the shoe pinches,” said the minister.

At its next meeting, the Council will finalize a mechanism to implement the anti-profiteering mechanism envisaged in GST laws meant to protect the consumers.

Referring to concerns raised by parliamentarians on impact of GST on prices, Jaitley said it is mandatory for manufacturers to pass on the benefits of reduction in tax burden to consumers. He expressed hope that the decision of automobile manufacturers to cut prices on account of reduced tax burden, will be followed by others manufacturers.

“In a short while, we are going to finalize the entire mechanism as far as anti-profiteering is concerned. All you need is to make a few examples and then everybody will fall in line. If there is benefit of input tax credit, then cost correspondingly must decline,” the minister said.

The minister also said that the government was in the process of taking action against all cases where it has received evidence of tax evaded funds held abroad. Jaitley said that information has been received from multiple sources including under bilateral information exchange deals. When intelligence is received, those involved in tax evasion are issued notices, their tax liability is assessed and claim is made in addition to initiating prosecution, the minister explained.

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