New Delhi: Finance minister Arun Jaitley said on Saturday that moderate taxes and high evasion could not coexist, as speculation continued over the rate of the proposed goods and services tax (GST).
Responding to calls for keeping the good and services tax (GST) rates in 17- 18 per cent range, he said industry and business must pay due taxes. They must also repay loans taken from banks. Without this, the country’s economy can’t function. If all pay taxes, rates can be brought down further. More the evasion and exemptions, higher will be tax rates, Jaitley said addressing the Bhartiya Janata Party (BJP) workers in Vileparle, western suburb of Mumbai.
BJP Mumbai unit President Ashish Shelar in his speech made plea for keeping the GST rate below 17 per cent. “So, moderate tax rates and evasion cannot coexist. When we evade taxes, it also bring aberrations in tax structures,” finance minister said.
Parliament passed amendment to the Constitution to introduce GST in the monsoon session. This will have to be ratified by atleast half states in the country. The data from assessment year 2012-13 show that large number of persons who file returns do not pay taxes. Taxpayers base has to expand, he added.
After important tax reform (GST regime), now government will focus on strengthening banks, he said. He, however, did not elaborate on steps to strengthen banks, especially public sector banks (PSBs).
The government will infuse Rs 25,000 crore in 2016-17 in PSBs. Similar amount was invested in 2015-16. The government has committed a total Rs 70,000 crore for capital infusion, while pegging the total requirement at Rs 1,80,000 crore for PSBs.
Most PSBs are reeling under the pressure of bad loans and high credit costs. With large amounts to be set aside as provision for bad loans, listed PSBs, as a group, posted a net loss in the June quarter, third such in their loss- making run.
The net combined loss for the 25 listed PSBs was Rs 1,193 crore in the first quarter ended June 2016, as against a net profit of Rs 9,449 crore in the same period of 2015.
The credit growth has been tepid from many quarters, affecting interest income and a surge in slippages, warranting huge provisions and reversal of interest income.