Reuters New Delhi, Delhi, India
Dec 02, 2016, 02.26 PM
Indian finance minister Arun Jaitley today repudiated a call by the state government of India's West Bengal to delay a planned Goods and Services Tax (GST) to avoid inflicting another economic shock in the wake of demonetisation.
He said the plan was still to launch the new tax on April 1. Time was tight because, under a constitutional amendment that enabled the GST, India's old system of indirect taxation would lapse next September.
"If on September 16, 2017, there's no GST, then there's no taxation," he said. "Our intention is to make sure it gets implemented from April 1, 2017."
Jaitley also said on Friday that a cash crunch following the scrapping of high-value banknotes would ease by December 30 with the release of new 500 and 2,000 rupee notes.
Jaitley said, however, that the amount of new banknotes being released would not be the same as that circulating before November 8, when Prime Minister Narendra Modi announced the so-called demonetisation to purge the economy of illicit "black money".
Modi, at a stroke, removed from circulation banknotes worth an estimated 17 trillion rupees ($249 billion). Finance ministry sources say they plan to reissue just over half of this - a task that would take months given the capacity of India's four banknote printing presses.
Modi set a 50-day deadline that runs to December 30 for people to swap or deposit their old banknotes. He has promised the situation would stabilise by then and urged Indians to adopt cashless payment forms such as debit cards and mobile wallets.
"Obviously, one of the advantages of this exercise is going to be that you won't have the same level of paper currency which existed," Jaitley told the Hindustan Times Leadership Summit.