In order to make India’s taxation globally competitive, Finance Minister Arun Jaitley on Monday pitched for a lower level of taxation in the country. “What you need is lower level of taxation, to provide services more competitive in nature. Competition is not domestic, it is global,” Jaitley said.
The Finance Minister said gone are the days of the philosophy that high taxation will bring greater revenues and that since 1991 the course of economy has altered itself.
Explaining the lower level of taxation mechanism, Jaitley said at an inaugural function of the professional Indian Revenue Service (IRS) officers’ training here, “What you need is a broader base of economy for which you need a lower level of taxation. You need to manufacture products and provide services which are more competitive in character and, therefore, your taxes have to be globally compatible,” Jaitley said, while inaugurating the professional training of IRS officers here.
Taking about the mindset of the people in the last 70 years, the Finance Minister said there has been an impression if avoidance could be done of the Government revenue, there is nothing improper or immoral about it. “This was considered to be commercial smartness and of course some people were visited with very serious consequences,” he added.
Encouraging the IRS officer on issue of taxation in the country, Jaitley said, “And the mindset of the tax payer should be that payment of legitimate taxes is a responsibility and then it should be reciprocated by you with a confidence in the tax payer. The tax payer is to be trusted, except when it’s proven otherwise. And, therefore, only in those select cases, very objectively selected, you go in for a wider audit or a wider scrutiny itself,” he said.
Jaitley said tax collectors will need to sharpen their skills as indirect taxes of the Centre and the States are eventually going to converge.
“Once they (taxes of centre and states) converge into one tax, the cooperation between the Centre and the State authorities itself will have to reach very high standards,” he said, while referring to the Goods and Services Tax (GST) which is on the anvil.
He added standardisation of practices, injection of technology and ability to detect any infringement of violation will require very large supervisory skills. Observing that there are no grey areas in criminal or tax laws, Jaitley said stricter principles would need to be applied to detect violation.
“There are no grey areas in taxation laws. It’s either black or white. It’s either payable or not payable. And therefore to discover grey areas in fiscal laws is not possible, that’s the same principle that applies to criminal law also, either an offence has been committed or not committed,” the Finance Minister added.