FM Arun Jaitley for tough steps on tax compliance

Finance minister Arun Jaitley assured India Inc on Friday that 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.

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

Promising more reforms, he 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.

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

The GST council has finalised a four-slab GST structure of 5%, 12%, 18% and 28% with a provision for an upper cap of 40%. The council will meet in Srinagar on May 18-19 to finalise tax rates on different goods and services after unifying at least 10 indirect taxes under 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),” Jaitley 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.