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GST implementation an example of tax terrorism: Chidambaram
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SME Times News Bureau | 20 Aug, 2018
Former Union Finance Minister P. Chidambaram on Sunday attacked the Modi
government on the falling value of rupee and said the manner of
implementation of the GST is an example of tax terrorism.
The
senior Congress leader also said that stagnant investment, fiscal
deficit under pressure and the state current account deficit is having
an impact on the macroeconomic stability.
Asked if absence of a
regular Finance Minister in the Modi government is responsible for the
economic slowdown, Chidambaram said: "I thought there were three Finance
Ministers -- one is de facto, one de jure, and one invisible."
On
the falling rupee, the former finance minister said:"The investment is
stagnant at 28.5 per cent. You cannot expect the GDP to grow more than 7
per cent.
"There is something known as Implemental Credited
Output Ratio (ICOR). In India, we normally take four ICOR. You divide
investment by Incremental Capital Output Ratio. It gives you an
indication of the growth. If investment is 28.5 per cent and you divide
it by four you will get a growth of only 7 or 7.1 per cent.
"Fiscal
deficit is under pressure. The current account deficit in 2017-18 has
already touched two per cent and I am told that in the current year, it
will cross 2 per cent. All this is having an impact on the macroeconomic
stability," he added. On whether the Goods and Services Tax is
flawed despite amendments, Chidambaram said that it proved that it was
implemented in a wrong manner.
"I think, there are still
grievances, there are still complaints. GSTR 2 and GSTR 3 have not been
notified. Tax liability is being decided by temporary GSTR form called
GSTR 3A. If you speak to business persons... they still face numerous
difficulties in complying with GST laws," he added.
Chidambaram
said that extraordinary powers have been given to various tax
departments and humongous numbers of notices are sent out by every
department.
"It only creates fear among the individuals as well as business persons," he said.
"Somebody
who runs a medium-sized business gets a notice practically every third
month... what is he supposed to do? Does the department have the
capacity to deal with one lakh notices and two lakh notices? They don't
have the capacity. Yet these notices are sent."
Chidambaram said
that since this government had a majority in Parliament it should have
repealed the so-called Vodafone amendment to the Income Tax Act.
"Far
from that, they have sent Retrospective Tax demands to many other
transactions. Vodafone did not turn out to be one-off case. There are
several other cases where demands for tax retrospectively have been
levied, which is frightening away investors.
"The way the GST is
implemented is an example of tax terrorism... you ask someone to file
37 returns in a year in a single state. If he has all-India business, he
has to file over 1,000 returns. What else is tax terrorism?" he asked.
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