In an exclusive interview to Rajya Sabha TV, Finance Minister Arun Jaitley said that he has received an overwhelming response on GST from all quarters of the society.
Here are some edited excerpts from the interview:
Q: Is this one of the biggest defining moments of your life?
A: Certainly it is. GST financially integrates India. GST allows free flow of goods and services across the country. You won’t be having the trucks waiting at the check-posts from now on.
You won’t have different rates for different states. You won’t have to pay taxes for various stages without getting any accounting advantage of tax already paid. You don’t pay tax on tax. These are the great advantages of GST itself. You don’t have multiple taxes.
I was counting myself that there are 17 taxes and 23 cesses which have been merged into one. So if you are to pay few of the taxes from these 17 taxes, you have to file multiple returns. You will have multiple inter-phases.
You have to get a CA to file your return. Today you have one return to file it online. You just have to go online and get your GST number through application and against that number, before the 10th of every month; you file your transaction of the last month.
That’s all you have to do. There is no inter-phase with the authority. So the impact of the compliance burden that goes down, the possibility of harassment, loss of time, corruption that goes down. In many cases you will receive you assessment orders online. That in Income Tax we have already done.
Q: Why is there paranoia among people…Certain sections of the society are holding protests?
A: There are two reasons. One is the fear of unknown. Secondly, some people in the system had developed a vested interest because it was easy to evade.
GST is more efficient system, is not easy to evade. Therefore, earlier I was getting away with my payments in the earlier occasions. Today it is not possible. More efficient system ensures compliance. Compliance will bring compatibility.
In the long run, it’s your patriotic duty to pay tax. Are you not supposed to pay for the army, the police, for the entire infrastructure you enjoy in the country?
The country needs resources, the government, state and the centre are been run by borrowing money from the people. On the other hand, people who can pay taxes are not paying their taxes.
There are people who are paying their taxes and also ending up by paying the taxes for the non-compliance. That’s the situation in the country. We are a large country with 130 cr people. Of these 17 taxes which are being merged, how many are actually paying their indirect taxes. Only 80 lakhs people were paying taxes, not even 1 crore. In the long run, the tax base has to increase. It only indicates the number of non-compliance.
Q: Amit Mitra says that it is going to hamper the small and medium scale traders.
A: How will it? You see when people lose all debate and discussion on GST, they go and rely on small. Upto 20 lakhs there is no tax, no registration. Up to 75 lakhs, if you are trading, you pay 1%. If you are manufacturing you pay 2%. If you are beyond 75%, I am afraid that you are not that small. Then definitely you have somebody to help you to put entry in your computer. All you need is one entry in your computer.
So some of the people have to really make up their mind that they are for GST or not. You cannot have multiple positions for GST, you need to have one. West Bengal government is privy to every decision taken by the GST council. This can’t go on indefinitely. This is not responsible governance by us, we agreed to the decision taken by the council and publicly we take our positions.
Q: GST council, the way it came up, the decision they are making, looks like a federal institution …
A: GST council is India’s first federal institution. There was no division in political lines, no voting. There used to be a fitment committee, there was legal committee and there were several officers in a separate committee, they used to consider on merits, the council used to sit as a judge, considered complaints coming from people, understand them, take a appropriate decision and decide. There was no division on political lines. Every decision is taken by consensus.
Q: How hopeful are you for the future, many things depend on states…
A: I am hopeful. The Congress led states participated in this proceeding. And most of them had a very responsible positioning in the council. I have no grievance. Look at the kind of people who headed and empowered the committee of state finance ministers.
You had Mr. Chidambaram announcing it in the budget, you have Pranab Mukherjee moving the amendment to the constitution, you have Yashwant Sinha head of the standing committee suggesting changes, then I had an opportunity to move the constitution amendments, and finally everybody voted in favour. So it is the larger consensus working as the previous government was inefficient. A new system had to come in.
Q: People in the council have come out and spoken to the media that Arun Jaitley is all about three things, patience, pragmatic and politeness…
A: I realised that to create a federal institution, you just cannot do it on the strength of majority. We had the numbers. If only NDA states came together then we could have passed anything. But we didn’t do it. We didn’t hold any meetings separately like BJP or NDA finance ministers. There were proposals that we mooted, BJP ministers who oppose to it.
And finally we worked out a consensus. Since we are setting a precedent to the GST council, we should do it by a consensus and not do it by majoritarianism. And we followed the consensus and I am glad that without any exception, every finance minister from various states agreed to it, irrespective of their individual concerned parties. Whether it is Haseeb Darabu from Jammu and Kashmir, Ashim Mitra from West Bengal, or Mr Isaac from Kerela, and many others. They all came to a consensus. Initially Tamil Nadu opposed but after the council was formed, they participated in every meetings held by the council.