Union Minister Arun Jaitley said on Sunday that the best of Goods and Services Tax (GST) is yet to come. At the same time interim Finance Minister Piyush Goyal assured that widening of the base would help in rationalising rates.
The Government is celebrating July 1 as GST Day. It was on this day last year that India ushered in its biggest indirect tax reform since Independence. GST subsumed 17 types of indirect taxes and 23 types of cess from both the Centre and states. Now, the new system prescribes one rate for goods or services throughout the country, making the nation a unified market.
“The longer medium-term and long-term impact of GST on India’s GDP growth, on ease of doing business, on expansion of trade and business and Make in India and honest trade and business, is going to be significant. I’m confident that the best of GST in terms of its contribution to society is yet to come,” Jaitley said while addressing GST Day celebrations here through video-conference. It was his first public appearance since he underwent a renal surgery on May 14. He is Minister without portfolio and in his absence Piyush Goyal is holding charge of the Finance and Corporate Affairs Ministry, besides Railways and Coal.
Jaitley had earlier termed GST a ‘disruptor.’ However, this thinking has changed now. He said he had seen experiences of countries all over the world, where GST had caused a major disruption. It was considered a disruptive reform. “I myself used to use the word disruptive when it came to major reform like GST, because it takes time to settle down. But after one year of experience, I’m not too sure whether I can use the word disruptive for GST reform,” he said while adding that the smooth manner in which the change-over has taken place is almost unprecedented anywhere in the world.
Jaitley said GST had the unequivocal support of the Prime Minister. Hence, the Union Government could work closely with the states in a coordinated and collaborative fashion to make GST a success. “We analysed reasons why past governments could not implement GST. We resolved all the issues raised by the states and assured them immunity from a fall in their revenue collection. The GST Council is India’s first consensus-based federal decision-making body”, the Minister said.
Listing the remarkable successes that GST has achieved in a short span of one year, he said the reform has created a unified market, cascading of taxes has been eliminated, the weighted average of the total taxation basket has come down, the GST Council is working upon continuous rationalisation of tax slabs and advance direct tax payments have increased as a result of the successful implementation of GST, among others.
The Minister said the total indirect tax collection for the nine-month period in the previous financial year post-implementation of GST was about Rs 8.2 lakh crore, which, if extrapolated for the whole year, comes to Rs 11 lakh crore, an 11.9 per cent increase in indirect tax collections. Talking about the capacity to rationalise current GST slabs, he said the GST Council is working in that direction and the desired rationalisation would come with the setting in of the stability of GST system, increasing tax collections by curbing tax evasion and increasing the tax net. He projected a 1.5 per cent increase in indirect tax collections in the non-oil category, which would facilitate the automatic rationalisation of tax slabs in the near future.
Speaking on the occasion, interim Finance Minister Piyush Goyal said the reform had put an end to illegal activities such as tax evasion by simplifying the tax administration and bringing about a transformation in the culture among trade and industry towards faithful payment of indirect taxes. He also informed that the Government proposed to bring an amendment to hike the threshold of turnover to Rs 1.5 crore under the composition scheme, during the monsoon session. At present the limit is Rs 1 crore and traders or manufacturers who opt for this scheme just need to pay GST at the rate of 1 per cent, but without input tax credit.