The goods and services tax (GST) regime would get stabilised in the next 18 months, Niti Aayog vice chairman Rajiv Kumar said on Friday.
“Give us time and you will see that in the next 18 months, GST will get stabilised, and this is where I think your (chartered accountants or CAs) role is critical,” he said while addressing the southern regional conference of the Institute of Chartered Accountants of India (ICAI) in Bengaluru. “Unfortunately, some of you are trying to scare investors away from GST rather than helping them. I think it is rather unfair,” he added.
Kumar said if CAs do not extend cooperation, India will not be able to erase dualism in terms of organised and unorganised sectors, which is not good for the economy. “Formalisation of the economy will give a fillip to tax compliance. At present, tax compliance is between 40 to 43%. It must increase to 90%. The role of CAs becomes that much important,” he said.
Kumar said tax rates under GST will rationalise into three slabs, from five at present. “In times to come, tax rates under goods and services tax will converge into three slabs — 0, 12 and 28 per cent,” he said. Kumar said to expect one tax rate under GST was impractical, given the size of the country which is equal to all European nations from Moscow to London put together.
“Also, there are varied cultures and business ethics followed by different states, and hence it is not feasible to have one tax rate under GST. Hence, it was necessary to have those multiple rates,” he said. Kumar said it will be a huge step forward if petroleum products are brought under GST, about which union finance minister Arun Jaitley had recently spoken in the Rajya Sabha.
On demonetisation, he said the government may not have been able to convert all black money into white, but it has converted black money into grey. “Believe me, Rs4.5 lakh crore that has returned to banks by way of demonetisation will be acted upon,” he added.