Closer to first anniversary of GST, the government on Monday said the new indirect tax regime has added more jobs in formal sector and widened taxpayer base.
It noted that partial inclusion of real estate in the new structure had brought builders and those dealing in steel and cements into tax-net.
But government does not seem to be satisfied with the current level of tax compliance and wants people to pay non-oil taxes honestly. Union minister Arun Jaitley has appealed people to pay taxes and equated it with patriotic duty of citizens.
“The tragedy of the honest taxpayer is that he not only pays his own share of taxes but also has to compensate for the evader. My earnest appeal, therefore, to political leaders and opinion makers is that the full and complete suggestion would be that evasion in the non-oil tax category must be stopped and, if people pay their taxes honestly the high dependence on oil products for taxation eventually comes down,” he said.
In a separate statement, the finance ministry said GST is the biggest reform measure, which is eliminating transactions that were not recorded earlier in the books of accounts and thus were outside the tax net so far. The finance ministry assertion has come even as opposition parties have termed the GST rollout as faulty blaming it for job losses in informal sectors. The ministry has said there are early signs of tax base expansion and is expected to rise. As many as 6,60,000 new agents, previously outside the tax net, sought GST registration between June and July 2017. Further, the entire textile chain is now brought under tax net.
“A segment of land and real estate transactions has also been brought into tax net “works contracts”, referring to housing that is being built. This in turn would allow for greater transparency and formalisation of cement, steel and other sales, which earlier tended to be outside the tax net. The formalisation will occur because builder will need documentation of these input purchases to claim tax credit,” the finance ministry said. The government had launched GST on July 1 last year turning the country into one common market with uniform tax structure. After initial glitches, the new tax system has now settling and yielding desired results.