Union Finance minister Arun Jaitley on Saturday said that the Reserve Bank of India will soon complete the process of remonetisation by injecting enough money through the banking and postal system in line with the objective of reducing use of cash currency in the economy.
Speaking at the annual general meeting of lobby group FICCI, Jaitley said the economic and social consequences of high level of use of cash currency compared to GDP is extremely adverse.
“It leads to a lot of aberrations such as tax non-compliance, currency use for collateral purposes including crime, escaping the tax net and money not getting into the banking system. One of the efforts of the whole exercise is to encourage digital currency to supplement cash currency,” he said.
Jaitley said the long term benefits of the demonetisation process is absolutely clear “even if we bear with some of the short term pain of this decision”.
On the proposed Goods and Services Tax (GST), Jaitley said the matter of how the responsibility of scrutinising assessees is shared between the states and the centre is a small issue”. Both sides are scheduled to meet next week to resolve this vexed issue which lacks consensus.
Jaitley said has to cross-empower both the states and centre for such assessments in the absence of a federal tax bureaucracy for this purpose which would have been an ideal situation.
The finance minister reiterated that centre and states don’t have the luxury of time and GST has to be implemented by 16 September 2017 as constitutionally mandated.
“Since GST is a transactional tax, its implementation can start at any time of the year. Earlier we do it is better,” he said.
The government has set its eyes on implementing GST starting 1 April, coinciding with the fiscal year. But uncompromising attitude of states post demonetisation has threatened to derail the GST timeline.
