Finance Minister Arun Jaitley on Saturday said demonetisation and GST will make cash transactions a lot more difficult and lead to greater compliance as well as expansion of tax base. Jaitley said the Government has come out with laws to contain overseas black money as well as those dealing with domestic black money and cracking down on shell companies.
The Minister said the country had reconciled to a Indian normal -- a very large number of tax non-compliance and very large amount of transaction which took place outside the system. “There was almost a helplessness in trying to deal with the situation. Every year through the Finance Bill we would announce some changes which at best had a marginal impact. I think the lasting impact of those marginal changes was not very significant.” “And therefore, steps had to be taken in order to make a very significant impact,” he said, adding that seen in totality, the steps taken by the Government will have a ‘great long term impact’ and a ‘substantial ethical rationale’ behind it.
“Net impact of the demonetisation exercise coupled with the GST exercise, which is going to make generation of cash a lot more difficult, will certainly lead to greater compliance, greater digitisation. And the first signs of greater digitisation, expansion of the tax base of direct and indirect taxes is already visible,” Jaitley said.
Speaking at the Delhi Economics Conclave organised by the Finance Ministry, he said the first significant step taken by the Government, which shook the system, was penal action against those who stashed money abroad.