Indians should pay taxes to become developed nation: Arun Jaitley

The finance minister said the government cannot keep lending money from various institutions to run the country. It has to get money from the citizens in the form of taxes.

India should have a “new normal” with citizens ready to pay the taxes they need to pay and a new mindset to move from a developing nation to a developed one, finance minister Arun Jaitley said in New Delhi on Saturday.

Finance minister Arun Jaitley arrives for the special Session of the GST launch at Parliament House in New Delhi on June 30.(Arun Sharma/HT PHOTO)

“During the time of demonetisation I have said that India now needs to define the new normal. And the normal is whatever taxes I have to pay, I need to pay,” he said, addressing the ‘Chartered Accountants Day’ organised by The Institute of Chartered Accountants of India.

Jaitley said it is time now that India should move from a “developing economy to a developed economy”.

“To take the country forward this mindset should also become the mindset of a developed economy.”

The government on Saturday rolled-out the Goods and Services Tax (GST) across the country, the biggest indirect tax reform.

Jaitley pointed out that for decades there had been a tendency to evade taxes.

He referred to the 1 per cent levy on gold that led to protests across the country and it had to be withdrawn. But the same set of people welcomed GST Council’s decision to put gold in 3 per cent tax bracket.

Jaitley said the government cannot keep lending money from various institutions to run the country. It has to get money from the citizens in the form of taxes.

“We cannot do it because in our system it became a norm to evade taxes.”

Speaking about GST, he said it will add to the strength of the economic order and the formal economy will grow.

Referring to the current tax base, Jaitley said it was very low. Of the 130 crore population, only 78 lakh people show income above Rs 5 lakh, of which 61 lakh are salaried people.

He said, in indirect taxation under the three important categories - Service Tax, Value Added Tax and Excise Duty - a total 80 lakh people were registered, which is less than 1 per cent of the total population.

“This is the top 1 per cent economic strata of the society, which says they don’t know how to operate computer and hence I do not want to pay tax,” Jaitley said, adding that this was happening in a country which was famous for its information technology worldwide.

He said of the 80 lakh indirect tax payers, those below Rs 20 lakh a year are exempted and for those above Rs 75 lakh composition is provided.

“Please do something for the country - for the defence and development. Our system has been that not paying taxes is not wrong. No section can claim I have not paid taxes, so I will not pay.”

“The government which blinks will never be able to bring reforms. We are never scared to do any reform,” he added.