Faridabad: In what might be the first hint of a course correction after the blistering attack on Finance Minister Arun Jaitley by veteran BJP leader Yashwant Sinha, the former has indicated that there is scope for lesser slabs under the Goods and Services Tax once there is revenue buoyancy.
Sinha, it will be recalled, had been extremely critical of the finance ministry’s handling of the GST and the demonetisation drive. “We are in the first 2-3 months of GST implementation. There is considerable space and scope for improvement to reduce the compliance burden as far as small taxpayers are concerned,” he said.
“We will have this space for improvement eventually once we become revenue neutral, so that we can think in terms of bigger reforms such as lesser slabs, but for that we have to become revenue neutral…,” he said at an event organised here.
At present, there are four tax slabs of 5, 12, 18 and 28 per cent, plus a levy on cesses on luxury items like cars, aerated drinks and tobacco products to compensate states for any revenue losses in the first five years. An overwhelming 81 per cent of items under the GST regime attract tax of 18 per cent or below and only about 19 per cent of items are taxed at the highest rate of 28 per cent.
Emphasising that indirect tax burden is borne by all sections of the society, the minister said it is always the endeavour of the government to bring down tax rates on mass consumption commodities. “Direct tax is paid by more by the more affluent, somewhat by the others and certainly not by the weaker sections, but the impact of indirect tax places burden on all. Therefore, there is always an effort, as part of the fiscal policy, to ensure that the commodities which are consumed more by the common people are least taxed, compared to others,” he said.
Noting that India has conventionally been a tax non- compliant society, he said when people have the right to demand development, they also have the responsibility to pay what is required for the development.
Addressing the 67th batch of Indian Revenue Service officers, the finance minister said revenue is the lifeline of governance and all the developmental activities. “You don’t have to extort taxes from those who are not liable to pay…as tax people, you are not entitled to invite fear, you have to invite a respect that you are somebody who (wants) people to comply with national duty,” he said. He also said there are never grey areas in taxation law and it is the duty of tax officer to be firm and fair.
Sinha may get to meet PM at Patna
It was BJP leader Yashwant Sinha’s grouse that PM Modi was not inclined to meet him. Sinha’s wait may be over as on October 14 the PM is scheduled to attend the centenary celebrations of Patna University. Vice Chancellor Ras Bihari Singh confirmed that he has also invited Sinha, who graduated from the institution with a degree in political science and then taught there. Of course, whether the two leaders get to meet at the function and break the ice is another matter.