The Union Budget proposal to introduce Goods and Services Tax (GST) from April 1, 2016, is an effective solution to address the black money threat within the country, Sachin Menon, national head, indirect tax practice, KPMG India, has said.
Addressing a session on ‘Union budget impact analysis 2015’ organised by KPMG here on Tuesday evening, Mr. Menon said once the GST regime took effect, reporting of all sources of income would become mandatory, which would put an end to the black money menace domestically. But GST compliance required a roadmap.
The Bill would have to be passed by both Houses of Parliament, approved by the State Assemblies, and the rates and exemptions also have to be worked out, which was a political process. “The NDA does not have the majority in the Rajya Sabha. If the GST rate is fixed at 27 per cent, it will not see the light of the day,” he said.
He said the proposal to widen the tax base would inevitably lead to tax terrorism of some sort.
At present, 60 per cent of the people were not paying taxes.
To achieve the ambitious tax collection target set by the Centre, taxmen would have to impose themselves on taxpayers and that would end up in tax terrorism.
A sum of Rs.2 lakh crore was remaining entangled in frivolous tax litigation. The recovery rate through litigation was very nominal, he said.
The mood of the budget was reflected in the stock market. Thrust of the budget was on the Make in India campaign. The proposals were expected to improve ease of doing business in the country, Mr.Menon said.
Planning Board member G.Vijaya Raghavan said the State had nothing much to cheer about from the 14th Finance Commission recommendations. For, the Centrally sponsored schemes and the additional Central assistance had been done away with.
The States did not get too much as projected, the only benefit was the flexibility to utilise funds. The budget had no big projects. There were only statements of intent and not enough money, he said.
Reporting of all sources of income will become mandatory
GST compliance needs a roadmap