Digitisation, GST to expand formal economy: Jaitley
FM sees potential for further growth
Finance minister Arun Jaitley said there is potential for further economic growth, particularly after the implementation of GST and the integration of informal economy into the formal one.
Speaking at a conference on goods and services tax (GST) here on Wednesday, Jaitley said there was scope for improvement, but declined to suggest what growth could be like next year.
He said digitisation that got a leg up post-demonetisation along with GST, will lead to greater expansion of the formal economy and boost growth.
“The two steps together will lead to a larger economy and a cleaner GDP. I am hopeful that we will see the two this year,” Jaitley said at the sidelines of the Vibrant Gujarat Global Summit.
The finance minister advocated the need of a cashless economy and explained why it was important for country saying, “Excessive paper currency has its own vices.”
He said that in terms of taxation, India is substantially a non-compliance society. The narrowness of our tax base is evident from the data, adding that when formal transactions expand, it can lead to higher revenues.
The finance minister also said that the one- nation-one-tax regime would lead to seamless and hassle-free transfer of goods and services in the country.
Before the Bharatiya Janata Party-led government assumed office in 2014, the country lacked a proper direction.
“The country needs bold decisions to reform the economy. India has become incre­asingly aspirational. A new India has emerged,” Jaitley said, adding the country has undergone ‘huge chan­ge’ over the past 2&1/2 years.
In an indirect reference to the US and the UK, he sa­id while protectionism is de­bated in the developed wo­­rld, there’s hardly any me­n­tion of it in India. While US president-elect Do­nald Tru­mp has been cri­t­ical of firms outsourcing jobs, the UK recently voted to break from European Un­i­on to pr­o­tect its economic interests.
He also said while India was re-negotiating treaties si­nce 1996, tangible decisi­ons came only after the NDA government assumed office under Narendra Modi.
He was referring to the signing of the amended double taxation avoidance agr­eement (DTAA) with Singapore, Cyprus and Mauritius.
In the last week of December, India and Singapore amended DTAA for the avo­i­dance of double taxation and prevention of fiscal evasion with respect to taxes on income. India and Mauritius last year agreed on source-ba­sed taxation of capital gains arising from alienation of shares acquired from April 1, 2017, in a firm resident in India. Investments made before that would not be subject to capital gains tax here.
Similarly, the revised DTAA between India and Cy­prus, signed in November, provides for source-based taxation of capital gains arising from alienation of shar­es, instead of residence-ba­s­ed taxation provided earlier.
On the GST logjam, Jaitley said the government was aiming to implement it from April. “There is a provision for GST implementation because constitutional amendment has been passed. It’s a constitutional necessity that before September 16, it sho­uld be rolled out,” he said.
Jaitley hoped the issue of dual control of taxpayers would be resolved at the next meeting of GST co­u­­ncil scheduled for January 16. “We would want it to be implemented from April if all issues are resolved. But implementing it by September 16 is a necessity,” he said.
Prabhudatta Mishra