Raghuram Rajan, the former governor of the Reserve Bank of India, has bet big on the Goods and Services Tax (GST) implemented in July last year, saying that it will have positive effects in the long term. In an interview with ET Now, Raghuram Rajan said that the long-term benefits would be tremendous, but also advised Arun Jaitley to not cut rates or bring changes frequently and let it stabilise.
The GST Council, ever since the implementation of the new indirect tax law, announced several tax rate cuts and changed rules in a bid for higher compliance and revenues. The biggest of them came in November when the council announced tax rate cuts on 177 items, and restaurants and also changed upper limit of the composition scheme. The council, then, had announced a slew of changes in the GST Returns filing, including temporary withdrawal of the GSTR-2 and GSTR-3.
The Council, in December, gave approval to an early roll-out of the E-Way Bill from February 1 with an aim to curb tax evasion. Recently, the Council announced rate cuts on 29 items and 54 services, while it is hoping to simplify tax returns process before the Union Budget 2018. Since the implementation of the GST, the Council has met 25 times and taken major decisions, including additional cess on luxury cars. The GST Council, headed by Arun Jaitley, says that it is an on-going process and changes are brought-in as required.
On the sidelines of the annual World Economic Forum meeting in Davos, former RBI governor Raghuram Rajan opened up on a range of issues including the GST, demonetisation, current RBI governor Urjit Patel and economy of Western nations in a slew of interviews.
He said that the Western world must realise they cannot go a long way without the help of the emerging economies and warned that no one would be able to resolve any problem of a “fractured world” if things are not set right soon. Rajan, who is now a Chicago University professor, is credited with having predicted the global financial crisis of 2007-2008.