HYDERABAD: Vice President M Venkaiah Naidu on Tuesday said that with the introduction of GST, the biggest ever tax reform taken since Independence, India was finally ‘one-country, one-market’.
Inaugurating a National seminar on “contemporary issues and challenges in finance, market and taxation”, Mr Naidu said this reform had changed the face of the indirect tax regime in the country as it imposed one tax instead of several taxes by various State Governments and the Union Government.
In other words, it had made compliance easy for businesses and traders and will lead to further improvement in the ease of doing business in India. GST demonstrated the victory of bipartisanship in the democratic and federal set-up of India, he said.
Mr Naidu said India’s tax-to-GDP ratio was 16.6 per cent in FY2017, which compares with 26.0 per cent in the USA, 20.1 per cent in China, and 34.3 per cent in OECD countries. India needs to significantly ramp up its tax-to-GDP ratio to fund a modern 21st century government which can offer basic public goods and social security to its citizens.
He said direct tax collected in FY2018YTD has grown at 18.2 per cent. This increase in collection has been driven by increase in compliances with the number of taxpayers increasing for both direct and indirect taxes. 5.9 million tax-payers have registered for GST and 28.2 million people filed their income-tax returns for FY2017.
Demonetization, SIT on black money and notification of the Benami Transactions Act, 1988 were some of the strong steps taken to bring more economic activity into the tax net, even as the war on black money needs to continue unabated, Mr Naidu said.
The Vice President said that since GST would be levied at the manufacturing cost and collected at the point of sale, it would bring down the price and benefit the consumer. It would be a win-win situation for both the manufacturers and consumers as reduction in price will lead to increased consumption.
He said GST would also eliminate corruption and tax evasion as a retailer would not be able to conduct sales without the bill. Since all the compliances like registration and returns would have to be done online, GST would increase compliance and makes the system transparent, hassle-free and eliminate corruption.
Mr Naidu said paying taxes promptly would improve public finances and enable the Governments to meet their developmental and social objectives. Therefore, companies and businesses contribute to economic prosperity and growth of the nation.
He said Economic growth and reforms had created a large consuming class of citizens in India who now have consumption patterns very similar to the best in the world. Around 50-100 million people in India have broken out into the ranks of the global consuming class.
The Vice-President said “There is an aspiring class of 200-300 million middle-class Indians (many of them now own four wheelers and electronic gadgets). Another class of 500-600 million people is now breaking out of the poverty and graduating from cycles to motor cycles and mobiles.
India has hence seen significant interest from foreign firms to invest FDI to serve this market”, he said. (AGENCIES)
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