Interim Finance Minister Piyush Goyal has said that the Centre would continue to simplify and rationalise the Goods and Services Tax. Goyal, who is handling the ministry while Arun Jaitley convalesces, called the GST regime a “game-changing” reform, the Hindustan Times reported on Saturday.
The minister’s comments came a day ahead of the first anniversary of the implementation of the tax system. “It is a demonstration that we can make bold and powerful reforms in this country,” the minister said, adding that the number of assessees indicates the “formalisation” of the economy. The number of indirect tax assessees have increased around 40% to 11 million.
Responding to the criticism of GST for having five tax slabs, Goyal said it would be unfair to tax a product meant for the rich at the same rate at which a product meant for a poor man “in rubber slippers” is charged. If revenue collections improve and tax receipts stabilise, the GST Council might lower rates on all products, he added.
“If revenues increase, the government will want to pass on the benefit to consumers,” The Times of India quoted Goyal as saying. “Higher revenues will result in a lower fiscal deficit, more investment in infrastructure and create elbow room to cut rates.”
Since its launch, the Centre has lowered rates on around 320 items, a majority of which are in the top slab of 28%. Last week, outgoing Chief Economic Adviser Arvind Subramanian said that removing the 28% tax slab and establishing a uniform rate of cess should be the first step to simplify the indirect tax structure.
Goyal urged consumers to demand a bill on every purchase, saying it would help reduce revenue leakage and bolster collections. The minister said the government would soon launch a helpline where consumers can lodge a complaint against retailers unwilling to issue a bill or those who demand cash payment.
Meanwhile, Finance Secretary Hnasmukh Adhia told Hindustan Times that technological glitches and information gap had proved to be the biggest challenges in implementing the Goods and Services Tax.
“Information gap is expected when a new system is introduced, but our department has undertaken a massive push to disseminate information,” he said. “And it is because of this that the [GST Network] system has stabilised. The issue with refunds cropped up only because of lack of understanding. Now the information gap has been bridged and 90% to 95% of the refunds have gone.”
He said the tax regime’s biggest success had been the “formalisation of the economy”. The Goods and Services Tax had also broken down inter-state trade barriers and led to an increase in tax compliance. “Now, with GST, the big difference will be that it is driven by IT, so it will be increasingly difficult for people to defraud the system,” Adhia claimed. “In fact, there will be no need for physical inspections, the information capturing is automatic.”