Arun Jaitley is on a week-long visit to the US to attend the annual meetings of the International Monetary Fund and World Bank. Photograph:( Reuters )
Finance Minister Arun Jaitley, who is on a week-long visit to the US, said on Monday that India's transition to the Goods and Services Tax (GST) regime has been "fairly smooth" despite attempts by "ill-informed" Opposition leaders to derail its implementation.
The finance minister said the transition had been smooth because the government had introduced the lowest tax slab of five per cent which does not exist anywhere in the world so as to bring the non-compliant into the tax network.
"So the lowest slab in India is five per cent, which doesn't exist anywhere in the world. That is because of the non-compliant tax character of the Indian society. You make it easy for people to enter the taxation system that you are able to expand. In the GST, for up to 10 million turnover we now have a scheme for them," he said.
"We are trying to bring them into the tax net because the first two months data has shown that almost 95 per cent of the tax is just being paid by 400,000 accesses.
Therefore, it's very top heavy in terms of payment. And there's a need to continue to expand the tax base at the bottom itself," he said.
The finance minister said that governments in the Opposition-ruled states were not listening to their leaders since they knew that "80 per cent of the money" would come into the state coffers and they did not want revenues of their states to suffer.
"Many attempts have been made by political groups to derail the GST, but I am glad that their own state governments are not listening to them because they know 80 per cent of the money is going to come to them so they don't have to appease an ill-informed central leader of the party and let the revenues of their own state suffer," Jaitley told an audience in New York.
"So, the state governments are being wiser," Mr Jaitley said in response to a question during an event titled 'India's market Reforms: The Way Forward' organised by the Confederation of Indian Industry in association with the US Chambers of Commerce.
The finance minister is in the US to attend the annual meetings of the International Monetary Fund and the World Bank.
He said that the GST Council was India's first genuine federal institution and met every month to review the monthly situation, take decisions, review rates and changes of rates which will take place in the times to come itself.
Arun Jaitley said the obvious problem in the GST was that the non-compliant were going to eventually come into the net because of which complaints were inevitable.
"And therefore there are going to be different complaints -- some legitimate, some manufactured thrown up by the non-compliant how GST is creating a problem for them," he said. The finance minister emphasised that the government needs to have capacity to distinguish between a genuine and a manufactured complaint.
Arun Jaitley said the global integration of the Indian economy was happening at a time when other economies were becoming more protectionist.
He asserted that India was now a better place to do business with because of the series of steps being taken by the government in the last three years including simplifying proceedures, abolishing the Foreign Investment Promotion Board and enabling 95 per cent of the investments through the automatic route.
He said 99 per cent of tax queries were addressed online and states were being ranked on the ease of doing business.
He added that India was now capable of taking big decisions and implementing them on a large scale.
Mr Jaitley said as many as 250 highways projects were under construction and that India now had the surplus power and the capacity of Indian ports had been expanded.
Responding to a question on digital payments, the finance minister said the younger generation was taking on to modern payment methods in a big way.
He also said government benefits were linked directly to bank accounts. The government has introduced low-cost insurance policies to incentivise the bank holders, he
Jaitley also addressed American investors on recent economic reform initiatives.
He will address the Columbia University students today.
But before arriving in Washington DC for the annual IMF and World Bank meetings, the finance minister will travel to Boston and address the students of the Harvard University. He will also interact with the US business community in the city.
During his three day stay at Washington, the finance minister will hold a bilateral meeting with US Commerce Secretary Wilbur Ross.
He will also participate in an interactive seminar organised by the FICCI on -- "India Opportunity Conference" and attend the G-20 Finance Ministers and Central Bank Governors' Working Dinner on October 12.