An expansion of the taxpayer base and a clampdown on tax evasion will help the government bring down tax rates, finance minister Arun Jaitley said on Thursday, pointing out that taxation reforms are a work in progress.
Addressing an event organized by industry body Assocham, Jaitley said an increase in the taxpayer base with the advent of the goods and services tax and in the aftermath of demonetisation will help in generating more revenues.
“More tax revenues means more reasonable rates of taxation as you can concede more,” he said. “First reform that Indian taxation requires that people should pay taxes. We are one of the most tax non-compliant societies in the world. It creates an aberration wherein the honest taxpayers have to bear additional burden because of the dishonest,” he said.
He also pointed out that moving towards a less-cash economy will help in curbing crime to a large extent.
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“Demonetisation has forced many into the banking system. It has forced even the non-compliant to spend through the banking system,” he said adding that this will also lead to a squeezing of the parallel economy and consequently generate higher tax revenues.
“Generating that (unaccounted) cash will be difficult, spending that cash will be difficult as the transactions will be captured,” he said.
The introduction of the goods and services tax will also help in creating a digital transaction trail for all transactions, expanding the taxpayer base while reducing the harassment faced by taxpayers.
Jaitley also flagged the increase in protectionist tendencies in the developed world, adding that their impact on trade will have to be watched closely.
He added that the current mindset in India favours reforms.
“India today is prepared for reforms much more than it ever was in the past,” he said, adding that the bulk of the public opinion favours reforms.
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