TMI BlogDEMONETIZATION, GST AND WAY FORWARDX X X X Extracts X X X X X X X X Extracts X X X X ..... DEMONETIZATION, GST AND WAY FORWARD - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 4-1-2017 - - Why taxes are expected to be lowered There is a general sentiment everywhere that India may witness a lower tax regime hence forth. This is the hope of citizens and businessmen as also being realized (off late) by the Government and tax administration. In direct taxes, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he percentage of people contributing by way of income tax and corporate taxes is negligible, given the population of earning population. The number of tax payers as well as their contribution is low. Tax to GDP ratio is hovering around 10 percent since last fifteen years whereas in the world, many developed nations have such ratio ranging between 17-30 percent. India's GDP for FY 2016-17 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expected to be in the range of 6.9 7.5 percent, a slightly low estimate post demonetization exercise. Some of the reasons which could be attributed for lower tax rates in future, to list a few, are as follows Government's appreciation of the fact that a lower tax rate regime spread over a large tax base (assessees) is a better option. Change in tax administrator's mindset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a higher tax regime leads to large tax evasion. Simpler tax laws with e-tax compliance would lead to better compliances and more tax collection coupled with reduced litigation Various tax amnesty schemes would reduce tax litigation and bring tax evaders to main stream Shrinking black money in the system would bring more businesses in the main tax compliant stream As an effect of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emonetization, black money transactions would reduce substantially and more transaction would into tax net With about ₹ 15 lakh crore of demonetized notes now with banks, bank interest would be subject to tax base and tax collections will rise Better tracking of transactions due to low cash with public / businesses at large and more electronic payments With GST in offing in new futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, most of the transactions would come under tax less and parallel economy will significantly shrink. Indirect tax reforms would substantially contribute to tax revenues. Huge amount of extravagant expenditure is expected to come down leading to its application in other productive options which would in turn lead to tax revenues. GST Developments Today, GST Council has commenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its 2 days 8 th GST Council meeting in Delhi which is being considered a crucial one as it would seek to iron out centre State differences on cross empowerment to ensure single interface, issue of compensation in post demonetization scenario, suggested changes in model GST law after being examined by Law Ministry, draft IGST law, draft compensation law etc. It is understood that GSTC shall also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discuss certain industry specific issues pertaining to proposed GST. Given the fact that not even a complete month is left in the Budget date (1 st February, 2017) and April 2017 is too close for the GST to happen, with lot of approvals pending, it is a likely certainty that GST will miss the April 2016 deadline. For July or even later, much will depend upon Governments chemistry with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opposition in Parliament and outside. Let s hope that the GSTC does some wonders in this meeting, the first in 2017. It is hoped that we may look for a low tax regime with other significant tax reforms in near future. 2017 could witness lower taxes, both direct as well as indirect. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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