Did you ever imagine that a delay in the goods and services tax (GST) is making you pay more for your services and cars? Well, the answer is yes!
Even as the government has levied various cesses in this Budget, thereby increasing the burden of the tax payers to fund specific programs, once GST comes in, there will be a relief to the tax payers from various cesses, said a top tax official.
Talking to HT in an exclusive interview, Revenue Secretary Hasmukh Adhia said that a reprieve from cesses will come through once GST kicks in.
“Cesses are for specific purposes firstly. Secondly, under the new regime of GST there will not be any cesses,”Adhia said.
However, he did mention that the government of India will continue to hold a power to introduce a cess during the GST regime, but it will then have to be introduced only after the approval of the GST council which constitutes of state finance ministers as well.
Further explaining the logic behind introducing two new cesses and making an additional burden through the clean energy cess, Adhia said that “Since once GST comes in there will be no cesses, so this was the only year when there was a small chance of additional mobilization of resources through cesses for raising money for specific purposes such as for farmers through Krishi Kaliyan Cess, clean energy cess for environment and infrastructure cess for building traffic free roads and for a pollution free environment,” Adhia added.
Meanwhile, he also said that as government is paving way for a smooth and faster implementation of GST and there are concerns over the additional burden it will have for the common man. To address these, the tax department will soon come up with a study which will give the inflationary impact of the implementation of GST.
“As of now we do not know what will be the impact, we have commissioned a study to assess the inflationary impact it will have,” Adhia added.
It is being contemplated that once GST kicks in, for the first few years the tax payers will have to pay more leading to an additional burden on the common man across sectors and segments.
However, the government is still not been able to gauge as to when it will be able to have a political clearance for the GST bill to pass through.
Besides, he also talked about the compliance window for the people to come clean on domestic blackmoney, adding that “in the last two years over Rs 20,000 crore has been admitted at the times of raids as the undisclosed income existing in the domestic economy.”
However, the government is yet to recover this entire amount. Till now there were no estimates of the quantum of blackmoney which existed in the domestic economy.
He feels that a lot of people will use this window to come clean.
On the super rich tax being imposed in the budget, Adhia said that government had a choice either to increase the direct tax burden for all, or only for those who can afford to pay it.
“It was a choice that the government made and it was decided that rather than giving a tax break by increasing the limit of the tax slabs, which would have eroded the tax base or to put a marginal tax on the super rich who can bear it,” he said.
Reasoning it out he added that when the government increased the tax slab from a minimum of Rs 2,00,000 to Rs 2,50,000, as many as 40 lakh people went out of the tax net. Thus, at a time when the tax department has a policy to widen the tax net, the government did not have an option to tinker with either the tax slabs or with the tax exemption limits.