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Arun Jaitley rues tax evasion, says India cannot progress unless all citizens pay taxes


New Delhi: India should have a "new normal" with citizens ready to pay the taxes they need to pay and a new mindset to move from a developing nation to a developed one, Finance Minister Arun Jaitley said on Saturday.

"During the time of demonetisation, I had said that India now needs to define the new normal. And the normal is whatever taxes I have to pay, I need to pay," he said, addressing the 'Chartered Accountants Day' organised by The Institute of Chartered Accountants of India.

File image of Arun Jaitley. AFP

File image of Arun Jaitley. AFP

Jaitley said it is time that India should move from a "developing economy to a developed economy". "To take the country forward, this mindset should also become the mindset of a developed economy," he said.

The government on Saturday rolled out the Goods and Services Tax (GST) across the country, the biggest indirect tax reform.

Jaitley pointed out that for decades there had been a tendency to evade taxes. He referred to the 1 percent levy on gold that led to protests across the country and had to be withdrawn. But the same set of people welcomed the GST Council's decision to put gold in the 3 percent tax bracket.

Jaitley said the government cannot keep lending money from various institutions to run the country. It has to get money from the citizens in the form of taxes. "We cannot do it because in our system it became a norm to evade taxes," he said.

Speaking about GST, he said it will add to the strength of the economic order and the formal economy will grow. Referring to the current tax base, Jaitley said it was very low. Of the 130 crore population, only 78 lakh people show income above Rs 5 lakh, of which 61 lakh are salaried.

He said that in indirect taxation under the three important categories — Service Tax, Value Added Tax and Excise Duty — a total of 80 lakh people were registered, which is less than 1 percent of the total population.

"This is the top 1 percent economic strata of the society, which says they don't know how to operate computer and hence do not want to pay tax," Jaitley said, adding that this was happening in a country which was famous for its information technology worldwide.

He said of the 80 lakh indirect tax payers, those below Rs 20 lakh a year are exempted and for those above Rs 75 lakh composition is provided.

"Please do something for the country — for its defence and development. Our system has been that not paying taxes is not wrong. No section can claim I have not paid taxes, so I will not pay," he said.

"The government which blinks will never be able to bring reforms. We are never scared to do any reform," he added.

Updated Date: Jul 01, 2017 18:54 PM

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