Need tough measures for tax compliance: FM

NEW DELHI: Finance minister Arun Jaitley on Friday assured India Inc that the goods and services tax (GST) rates will not be “significantly different” from current levels, and said consumers will benefit from the country’s biggest tax reform as it will eliminate the cascading impact of various central and state levies.

Promising more reforms , Jaitley said the government was in the final stage of scrapping the 25-year-old Foreign Investment Promotion Board (FIPB) to ease investment flows. The government will also come up with rules for attracting foreign investment in defence equipment.

Addressing the Confederation of Indian Industry annual meeting, Jaitley urged companies to pass on the benefit of lower tax burden to consumers.

He also said some “tough steps” are required so that India increasingly becomes a tax-compliant society.

While the Parliament has passed all the four crucial laws– Central GST, Integrated GST, Compensation Rule and Union Territories GST bills, states have to pass the State GST Bill in their respective assemblies for the new tax regime to be implemented from July.

The GST council, headed by Jaitley and comprising state finance ministers, has also finalised a four-slab GST structure of 5%, 12%, 18% and 28% with a provision for a upper cap of 40%.

The council is scheduled to meet in Srinagar on May 18-19, to finalise tax rates on different goods and services after unifying at least 10 indirect taxes into the Goods and Services Tax (GST).

“We are now in final stages of fixing tariffs for different commodities. The formula under which it is being done has also been explained and therefore nobody is going to be taken by surprise, it’s not going to be very significantly different (from present),” he said.

Fitment of taxes will be done by adding the total incidence of central and state levies, and then categorising a good or service in the tax bracket closest to it.

GST is perceived to unify India into a one-nation one-tax market, shore up revenues of states and Centre, help in tempering inflation and boost economic growth by 1-2 percentage points in the medium term.

He said the GST Council had 13 meetings and has never had to resort to voting to decide on an issue.

“And therefore all states representing different political complexions, have all agreed (on GST structure),” he said.

The finance minister said the Council is of the opinion that any benefit accruing from lower tax rates under GST should be passed on to consumers.

Profit is not a bad word... but unfair enrichment is. And therefore the benefit of reduction in taxation is a benefit that consumers are entitled to ARUN JAITLEY, finance minister