NEW DELHI: Finance minister Arun Jaitley said on Friday that there is a Constitutional compulsion to roll out the Goods and Services Tax (GST) and asserted that the government’s intention is to kick off the ambitious reform by April 1.
“So, you have a Constitutional compulsion to have a GST in place before September 16 (2017), otherwise the country doesn’t run, and the tax is absolutely essential. Therefore, our intention is it gets implemented from April 1, 2017, that was the original intention,” Jaitley said at a function.
The FM said investors would be careful of choosing states if they are seen to be on the wrong side of reforms. “The states must welcome the decision and I can only tell you, if some states are seen as opposing every reform, then investors in the country and the ones coming from outside, must decide which are the states they want to invest in,” he said.
The political fallout of the demonetisation decision has cast its shadow on the rollout of GST. The GST Council is meeting in the national capital to finalise the GST laws and decide on the issue of dual control. States such as West Bengal have said that they are wary of implementing the new tax regime in the aftermath of demonetisation as this might destabilise the economy and may emerge as a “second blow” at this juncture.
The finance minister said that demonetisation along with GST will boost the economy and make it cleaner. “I have least doubt in my mind that (one year from now) you will have a bigger economy, higher GDP, cleaner GDP. You will have a higher tax base and more money in banks, and probably interest rates will be more reasonable. Therefore, all these collectively could contribute a lot as far as GDP is concerned,” the FM said.
He said both GST and demonetisation will usher in immense benefits for the economy. “I personally believe that once the remonetisation process is complete and the GST is implemented, it’s going to hugely impact India’s businesses and also the Indian way of life,” he said. “You will have more of digitised expenditures, you will have a taxation system far more efficient, which is extremely difficult to evade, where each limb of the transaction is being captured,” Jaitley said. The FM said he did not see the disruption due to demonetisation lasting long and hoped that interest rates will ease in the months ahead.“When you switch over, it creates disruption. I don’t see disruption lasting too long. You may see the impact for a quarter or so. Then when you look at next 12-15 quarters, it’s certainly going to benefit.”
“Rates will now hopefully, at some stage, come down. With more money in the taxation system, our base itself increases,” he said.
Credits ET Realty