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GST will also impact direct tax collection: Jaitley (Lead)

New Delhi, Aug 30 (IANS) Union Finance Minister Arun Jaitley on Wednesday said that the Goods and Services Tax (GST) is bound to impact the direct tax collection as well due to the increased detection technology and greater compliance.

“To claim input tax credit under GST, people need to disclose their volume of transactions. There is bound to be a corresponding impact on direct tax,” Jaitley said here during launch of a book titled “Concise Commentary on Income Tax” published by Wolters Kluwer.

“Therefore, the impact of GST will not only be on indirect taxes but also due to the efficient system, on direct tax. The possibility of tax detection is very high because of technology,” he said.

The Finance Minister said that even before GST was rolled out, the impact of demonetisation has expanded the number of assessees under the personal income tax.

Hinting at strict tax compliance measures ahead under GST, he said that currently there is “voluntary compliance” but queries will be raised for those whose vouchers don’t match when the actual process begins down the line.

“Currently the experiment is on for 1-2 months. The system is capable of throwing alerts where evasion takes place,” he said.

However, the honest taxpayer need not worry, he added.

“There is need for greater compliance for which the use of technology should be increased, physical contact between assessee and the tax authority needs to be reduced, but we also need to carry the stick if someone evades law,” Jaitley noted.

“It is about time that Indians revisit their attitude towards taxation. Indian normal was that how can we avoid it (tax). In the last 2-3 years what has happened has come as rude shock for many,” he said.

Referring the tightening of tax laws for greater compliance, he said that the government did give the opportunity to the people to declare their black money. The treaty provisions which facilitated “round-tripping” were re-written with countries like Mauritius, he said.

The 1988 Benami law was changed. “Indian chartered accountants earlier suggested their clients means to channelise money to avoid taxes. The standard operating procedure has been smashed and the Benami Act has come into force.”

The next stage is where the government is trying to avoid anonymity attached to cash, he said.

“We need to reduce the quantum of cash because it provides catalysing effect to corruption and tax evasion,” the minister noted.

He said that there is a cost attached to the evasion of taxes on the investment required in rural areas, education, health and national security.

“At the end of the day, we must realize it costs the country if the traditional attitude of avoiding taxes continues,” he said.

–IANS
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Post Source: Ians feed

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