GST@1 | Capacity to rationalise tax rates, slabs will increase as revenue collection rises: Arun Jaitley

The Goods and Services Tax (GST) Council’s capacity to rationalise tax rates, as well as slabs will increase once the total volume of tax collected rises ‘significantly’ by taking measures against tax evasion and expanding the tax net, Finance Minister Arun Jaitley said on Sunday.

“...As the tax collection goes up, the capacity to rationalize the slabs, the capacity to rationalise the rates, also will certainly increase. Therefore that capacity to rationalise will increase once the total volume of tax collected significantly increases. And once you have a more efficient tax, that more efficient tax system will ensure that evasion doesn't take place,” Jaitley said via video conference at the celebration of GST Day in New Delhi.

July 1, 2018, is being celebrated as the ‘GST Day’ to mark the completion of the first year of India’s biggest indirect tax overhaul.

Interim Finance Minister Piyush Goyal, revenue and finance secretary Hasmukh Adhia, Central Board of Indirect Taxes and Customs (CBIC) Chairman S Ramesh, top officials from finance ministry and bureaucrats from the department of revenue were present at the event.

Launched at a midnight event in Parliament’s central hall on June 30, 2017, GST is billed as the country’s one of the most ambitious reforms to make tax administration more efficient, bring in transparency, remove red tape. It was introduced turn India into a common national market by removing fiscal barriers among states and consolidating a patchwork of 17 local and central duties such as value added tax, central excise, special additional duties, cesses, and service tax into a single levy.

The rollout of GST was also accompanied with frequent changes in rules, leading to confusion among businesses, few rounds of rate cut and changes, complex return filing system accompanied with major technical snags on the reform's information technology backbone GST Network (GSTN).

Despite the initial hiccups, the tax reform as a whole was welcomed by the industry, as the Council ironed our major issues in 27 meetings over one year.

Jaitley, who looked physically frail after a major surgery, said that he is confident that the ‘best in GST’, in terms of contribution to the society is yet to come.

The electronic way or e-way bill has already been implemented since April 1 and once the invoice matching via new return filing system comes in, evasion and detection of evasion itself will become far simpler itself.

GST has not only created a unified common market, simplified tax system, removing the cascading effect of ‘tax on tax’, but also lead to higher direct tax collection, he said.

“GST not only impacts the indirect taxation, but those who have to disclose their turnover (now) for the purpose of GST and necessarily to pay the direct taxes, this net significant increase in the direct tax is substantially a attributable this year to the effective enforcement of GST,” Jaitley said.

During April-June quarter, advance tax payments indicate that the personal income tax collection (gross figure) has increased by 44 percent and corporate tax by 17 percent.

Jaitley further said that an increase of 1.5 percent in indirect tax collection in expected in non-oil category, which will facilitate the automatic rationalisation of tax slabs in the near future.

Despite the initial hiccups after the rollout of GST, and shifting several items to a lower tax slab, Jaitley said that there has been 11.9 percent growth, which is a tax buoyancy of 1.22 percent.