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'Demonetisation, GST will make generation of cash more difficult'
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SME Times News Bureau | 24 Jul, 2017
The Union Finance Minister, Arun Jaitley inaugurated the Delhi Economics Conclave-2017 on Saturday, in the national capital.
Jaitley on Saturday said that generation of cash will become difficult as a result of demonetisation coupled with the implementation of the Goods and Services Tax (GST).
"Demonetisation coupled with the implementation of Goods and Services Tax (GST) regime will make generation of cash a lot more difficult, help towards the objective by creating greater compliance and increasing digitisation," he said at the 3-day long "Delhi Economics Conclave 2017" organised by the Finance Ministry.
Jaitley said that both had led to an increase in digital transactions and a wider taxpayer base for both direct and indirect taxes.
"Signs of increasing digitisation are already visible in terms of expansion of direct and indirect taxpayer base," he noted.
Besides, Jaitley said three steps -- penalising those who had stashed illegal money abroad, benami property law and Bankruptcy and Insolvency Code -- attacked the black money in the system.
On this occasion, Tharman Shanmugaratnam, Deputy Prime Minister, Republic of Singapore also deliver the inaugural address on 'India Development Strategy and International Engagement Post-Hyper globalisation'.
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Faulty understanding of cash economy and wrong GST rates
U Pasricha | Thu Jul 27 06:25:01 2017
The cash economy was not created to evade income taxes but due to the customer demand to reduce cost for any purchase for personal usage. If last point of tax is above 5% one cannot expect patriotism to accept 12 or 18 and now even 28%. Though GST is very good for complex process with many components and vendors, there are thousands of products where the process entails buying varying raw materials for less than 2000 at a time which could be once a week, and then adding value by design, craft or manual effort to sell the end product weeks later many times the cost of raw material. So far this type of micro business is in the hands of middle men, leaving very little added value for the real maker. Just as we need to give farmer a better share of retail price, lacs of very entrepreneurial small craftsmen and hand workers now have a chance to get a better share with technology and digitisation allowing them to sell to customers directly. There is no logic to put a geographical limit on sales when there is a topline limit of 50 lacs. Perhaps the GST council can create a new category for those willing to pay 5% on any product with no set off allowed and no geographical limit. Gradually tens of thousands will register under that category. A shame to allow cash to return after the huge exercise of demonitisation and creation of digital payments.
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