GST Coun­cil to dis­cuss bring­ing real es­tate un­der its am­bit: Jait­ley

FMSPEAK Coun­cil to take up mat­ter for dis­cus­sion on Nov 9

Hindustan Times (Delhi) - - FRONT PAGE - Press Trust of In­dia feed­back@livemint.com

WASH­ING­TON: Iden­ti­fy­ing real es­tate as the one sec­tor where max­i­mum amount of tax eva­sion takes place, fi­nance min­is­ter Arun Jait­ley on Wed­nes­day said there was a strong case to bring it un­der the am­bit of the goods and ser­vices tax (GST).

The mat­ter will be dis­cussed in the next meet­ing of the GST Coun­cil, which will be held on Novem­ber 9 in Guwa­hati, Jait­ley said, while de­liv­er­ing a lec­ture at Har­vard Univer­sity.

“The one sec­tor in In­dia where max­i­mum amount of tax eva­sion and cash gen­er­a­tion takes place and which is still out­side the GST is real es­tate. Some of the states have been press­ing for it. I per­son­ally be­lieve that there is a strong case to bring real es­tate into the GST,” Jait­ley said, while de­liv­er­ing t he ‘An­nual Mahin­dra Lec­ture’ on In­dia’s tax re­forms. “In the next meet­ing it­self, we are ad­dress­ing one of the prob­lem ar­eas or at least (hav­ing) dis­cus­sion (on) it. Some states want, some do not. There are two views. There­fore, by dis­cus­sion, we would try to reach one view,” he said.

The fi­nance min­is­ter said the move would ben­e­fit the con­sumers who will only have to pay one “fi­nal tax” on the whole prod­uct. “As a re­sult, the fi­nal tax paid on the whole prod­uct in the GST would al­most be neg­li­gi­ble,” he said.

Jait­ley said the re­duc­tion in even­tual ex­pen­di­ture cou­pled with in­cen­tiviz­ing peo­ple to en­ter the tax net may also help re­duce the size of “shadow econ­omy”. A 12% GST is levied on construction of a com­plex, build­ing, civil struc­ture or in­tended for sale to a buyer, wholly or partly. How­ever, land and other im­mov­able prop­erty have been ex­empted from GST.

On de­mon­eti­sa­tion, Jait­ley said it was a “fun­da­men­tal re­form” which was nec­es­sary to trans­form In­dia into a more tax­com­pli­ant so­ci­ety. “If you see the long-term im­pact of it, de­mon­eti­sa­tion brought in more digi­tised trans­ac­tions; it brought the is­sue to the cen­ter­stage. It ex­panded the in­di­vid­ual tax base. It com­pressed the cash cur­rency by three per cent which was op­er­at­ing in the mar­ket,” Jait­ley said. “Those ob­jec­tives are for the long-term. No doubt there are short-term chal­lenges, but (nec­es­sary) for trans­form­ing In­dia from a non-com­pli­ant to a more com­pli­ant so­ci­ety,” he said.

The fi­nance min­is­ter said In­dia had his­tor­i­cally been one of the least ef­fi­cient tax sys­tem in the world with an ex­tremely small tax base. “Frankly, over the last sev­eral decades, se­ri­ous ef­forts, real ef­forts to ex­pand this base had not been made. You had mar­ginal ef­forts,” he said, adding that sys­tem­atic ef­forts to chal­lenge the “shadow econ- omy” were made only re­cently.

“In the last few years, the bulk of the in­crease in tax pay­ers has not been in terms of num­ber of com­pa­nies but in­di­vid­u­als who are com­ing into the tax net,” he said. Jait­ley said some peo­ple had “mis­un­der­stood” the ob­jec­tive of de­mon­eti­sa­tion “which wasn’t to con­fis­cate some­body’s cur­rency”. “Ob­vi­ously if some­body has cur­rency and de­posits in the bank, it does not be­come law­ful hold­ing. They still have to ac­count for it. There­fore, the anonymity which was at­tached to a cash cur­rency came to an end and that hold­ing got iden­ti­fied,” he said.

“The govern­ment was able to trace out about 1.8 mil­lion peo­ple whose de­posits are dis­pro­por­tion­ate to their nor­mal in­comes. And they are all to an­swer­able to the law and pay their taxes,” he said. Jait­ley is on a week-long stay in the US, dur­ing which he will par­tic­i­pate in an­nual meet­ings of the In­ter­na­tional Mone­tary Fund and the World Bank.

HT/FILE

Fi­nance min­is­ter Arun Jait­ley

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