As the Narendra Modi government wages its biggest war on black money yet, chief economic advisor Arvind Subramanian on Thursday pitched for including land and real estate under the GST regime to check money laundering and corruption.
Subramanian, who for the finance ministry had authored a report on possible tax rates under the Goods and Services Tax (GST), suggested that the new indirect tax set-up should be clean with simple low rates and should include land and property as well as electricity. GST, which the government intends to roll out from April 1, 2017, is to subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services, but property and electricity have so far not been talked about as being part of it.
“I still think we should aspire for simple, clean structure of rates which will have on balance lower and higher rates and that will be a necessary complement to fighting against black money that the Prime Minister has launched with demonetisation (of old 500 and 1,000 rupee notes),” he said at a conference here. He felt that land and real estate need to be part of the GST.
“Stamp duty (on property registration) is separate and states can retain the right to have stamp duty. The sale of land and immovable property should be part of GST so that input tax credit can flow freely in the system,” he said. This, he said, can “keep the system of self-policing” of black money. “So, it is terribly important that land and real estate being part of the GST,” he added. Subramanian said there is need to bring electricity charges that are not done by the states under GST.
“I think they should be part of GST and then the input credit can flow and make power more competitive. So, in terms of GST, clean, simple low rates, land, property part of it, power part of it also, will actually be not just important in itself but as a complement to bigger fight against black money and corruption that we embark on,” he said.
Subramanian had recommended a three-tier rate structure for GST, under which some essential goods were to be taxed at a lower rate of 12 per cent and so-called demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products at a higher rate of 40 per cent. All remaining goods were to be taxed at a standard rate of 17-18 per cent. He had proposed all services to be taxed at the standard rate of 17-18 per cent.
The GST Council, however, has finalized a four-tier tax structure — 5, 12, 18 and 28 per cent. “I think we need to focus on some of the things that need to be brought into GST — real estate, power. I think we should not lose sight of this because this comes at a time when we want to eliminate black money and corruption,” he said today. “Given that real estate and land are obvious sources of black money, this will help our overall sources combating black money.”
PAY ONLINE, GET UP TO RS 1 CRORE AS PRIZE
The National Institute for Transforming India (NITI) Aayog, the government’s policy think-tank, on Thursday announced daily, weekly and mega awards for consumers and merchants to encourage a transition to digital payments.
The awards will be offered through two schemes – Lucky Grahak Yojana for consumers, and the Digi-dhan Vyapari Yojana for merchants, and NPCI will implement the schemes. Under the Lucky Grahak Yojana, 15,000 winners will get Rs 1,000 each every day starting on December 25 and ending on April 14 next year.
In addition, there will be weekly awards for 7,000 people, and the maximum prize is worth Rs 1 lakh. The scheme runs from December 25, 2016, to April 14, 2017. On April 14, a mega award of Rs 1 crore will be announced. Under the Digi-Dhan Vyapari Yojna, 7,000 winning merchants will receive prizes worth up to Rs 50,000 every week.
Credits Bangalore Mirror