Bigger reforms regarding tax slabs and rates under the Goods and Services Tax (GST) regime can be considered once there is revenue buoyancy, according to Finance Minister Arun Jaitley.
Speaking at the “Foundation Day” event of the National Academy of Customs, Indirect Taxes and Narcotics on Sunday, the minister said, “We have almost by the day, space and scope for improvement... to reduce compliance burden as far as small taxpayers are concerned.” He added, “We have space for improvement, eventually once we become revenue neutral, to think in terms of bigger reforms such as lesser slabs, but for that we have to become revenue neutral...”
At present, GST slabs have rates of 5%, 12%, 18% and 28%.
Mr. Jaitley said, “In a society which did not conventionally mind being a non-tax complaint one, people are realising the virtues of compliance which comes with passage of time. This is the reason for tax integration. Once this change is established, we will have scope and space for improvement. And once we become revenue neutral, we (will) need to think of better reforms.”
India is going through indirect taxation at a time when the economy is growing, he said, adding that direct tax is paid by the more affluent sections, while indirect tax is a burden on all. “This is why, in our fiscal policy, we try to make sure that basic commodities are least taxed,” he said.
However, Mr. Jaitley said revenue was the lifeline of governance and of developmental activities in the country, adding that revenue is spent on developing rural areas, infrastructure and on national security. While everyone has the right to demand greater development, they also have a responsibility to pay taxes as it is needed for development, he said.
Mr. Jaitley further said that though there were no grey areas in taxation, tax officers needed to be fair and firm to ensure compliance and at the same time make sure that those falling outside the bracket are not unnecessarily burdened.