Gandhinagar, Jan 11: Union Finance Minister Arun Jaitley on Wednesday said that India was substantially a non tax-compliant society and demonetisation can lead to more formal banking transactions, thus nudging the society towards more compliance.
“We are substantially in terms of taxation, a non-compliance society. The narrowness of our tax base is realised by the data. Formal transactions can lead to higher revenues, and make us more compliant,” Jaitley said here at the Vibrant Gujarat Global Summit 2017.
“Excessive paper currency has its own vices. There is anonymity and no history to the cash. When it moves to the banking system it is going to be a major step towards integration of informal or shadow economy into a more formal economy,” he added.
With more efficient tax system and more digitisation, the economy would be cleaner, he added.
Talking about the inconvenience caused to various sectors because of the cash crunch due to demonetisation, he said difficult decisions initially pass through difficult phases.
“It can have temporary transient pain attacks, but in medium and long term, the roadmap on which country is destined to move can change,” he said.
“Hope to soon resolve issues with GST”
Union Finance Minister Arun Jaitley reiterated that he hoped that the critical issues of dual control and cross-empowerment in the Goods and Services Tax (GST) will get resolved over the next few weeks.
“GST Council is deliberative democracy in action. Most of the issues have been sorted. Some critical issues remain and I hope… they will be sorted out,” Jaitley said.
He was speaking here at the conference on ‘GST: The Game Changer for Indian Economy’ organised as a part of the ongoing Vibrant Gujarat Global Summit 2017.
“When GST merges all the taxes and makes India into one entity, it’s an advantage to the assessee as there will be no cascading effect of tax and will lead to larger revenues for states,” he added.
The next meeting of GST Council is scheduled on January 16, to discuss the critical issues of dual control and cross empowerment which deal with the assessee jurisdiction.