... And FM vows ‘modern, biz-friendly tax system’
Having initiated a series of administration and legislative reforms, India is on its way to have a modern and friendly tax system, Union Finance Minister Arun Jaitley has said.
“Such a modern tax system, which is friendly to the people and businesses, would be a key to realizing the goal of a double digit growth,” Jaitley said in his address at the Peterson Institute for International Economics’ a think-tank. “Tax policy and administration should incentivize compliance.
They should be administered fairly, transparently, with minimum discretion with no harassment of taxpayers but also ensuring that tax evasion is dealt with firmly,” Jaitley said spelling out his vision of a modern tax system.
“The tax net should be wide so that all citizens feel they are part of government. But rates should be low because taxes after all forcibly transfer money from citizens to the state,” he said. The Finance Minister said that to achieve these objectives India needed a modern, 21st century system for indirect taxes, direct taxes and tax administration. Jaitley exuded confidence that Parliament would pass the necessary Constitution Amendment Bill for the goods and services tax (GST) in the next three weeks.
“GST is a modern tax, a consumption-based value-added tax, and a tax that avoids tax cascading.
This would create a broad tax base and strengthen revenues going forward and the tax-GDP ratio,” he said. The GST will not only promote transparency and reduce corruption because of the paper trail it will create, he said. “We aim to secure legislative passage within the next three weeks at the Center after which it will go to the states,” he said.
“We have a GST council in which all the states and the Center are represented. It is a very democratic governance and voting structure,” he said, adding that the GST council will take a number of decisions relating to the revenue neutral rate. “We will aim to keep the rate competitive close to international levels and minimize exemptions,” he said. Jaitley said in the budget he had announced important corporate tax reform to reduce rates and broaden the base by eliminating exemptions.