The Finance Minister Arun Jaitley spoke at Confederation of Indian Industries summit in Visakhapatnam on Friday. Jaitley addressed wide range of issue from Goods and Services Tax (GST) to demonetisation.
Jaitley said that most contentious issues on GST are sorted out and they are at the final stages of implementation. He also added that demonetisation will integrate informal with formal economy in long run.
“This (demonetisation), coupled with GST, in the days to come will ensure much larger revenues as far as states and the central government are concerned and expand the size as far as the formal economy is concerned,” Jaitley said at the CII Partnership Summit in Visakhapatnam.
Stating that India is largely a tax non-compliant society, he said states and the central government struggled with their revenues to run the system which created an unfair enrichment in favour of the evader.
“It also becomes very unfair on the normal taxpayer because what the evader manages to evade is what the compliant has to pay more,” Jaitley said.
The government, therefore, decided to demonetise the high denomination currency, “which shook the system for some time”.
Jaitley said demonetisation has gradually increased the process of integrating the shadow, parallel and informal economies in far greater number with the formal economy.
“The size of the formal economy is expanding, so are the transactions in the banking system and through the digital mode,” he said.
As for the implementation of GST, the finance minister said new indirect tax regime will make India one single market, eliminate multiple assessments, check evasion and bring more revenues into the system.
“I am glad that almost all state governments have actively co-operated in making this a reality. Most of the contentious issues have been sorted out in the GST Council, a forum where you will see deliberative democracy in action. Those are now at final stages of implementation,” Jaitley said.
The government plans to implement GST, which will subsume excise, service tax, VAT and other local levies, from July 1.