Demonetisation, GST to make cash dealings tough: Jaitley
The impact of the demonetisation drive and the rollout of the goods and services tax (GST) will make it tough to deal in cash, leading to greater compliance, digitisation and widening of the tax base, Union finance minister Arun Jaitley said on Saturday. "Net impact of the demonetisation exercise coupled with the GST exercise... will certainly lead to greater compliances, greater digitisation. The first signs of greater digitisation, expansion of the base of direct and indirect taxes are already visible," Jaitley said in his opening address at Delhi Economics Conclave, a gathering of top economists and policymakers. Detailing the rationale behind taking tough measures, Jaitley said there was a very large amount of tax non-compliance, huge amounts of transactions outside the system, and 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," the FM said, adding that steps had to be taken in order to make a very significant impact. "If we look at the totality of the various steps we have taken, rather than look at them in a conjoint manner, each one of them are decisions which will not only have a long-term impact, but also have an ethical rationale behind it," he said. He said one easy format of converting black money was shell companies. "This has almost become standard operating procedure. This was not only used by people in businesses, it was used to round-trip corruption money by politicians, civil servants and others," Jaitley said. "I think not only the detection of this, but the decision to invoke the benami property law in acquiring these assets by the state is going to be a big deterrent," he added. The FM said the government was "actively working" on the electoral bond mechanism, but no party had come forward with a suggestion to make political funding transparent. "For the last 70 years, India's democracy has been completely funded by invisible money, and elected representatives, governments, political parties, Parliaments, and, I must say, even the Election Cmmission completely failed in checking it," he added. The FM said the solution doesn't lie in finding fault with every solution that is suggested. "Therefore, in the last Budget, I did suggest a solution and we are actively working on this," he said. "I asked political parties, both orally in Parliament and in writing, to offer a better suggestion if possible they have. Not one has come forward till date because people are quite satisfied with the existing system we had," he said. Jaitley added that he hoped, in future, the political system is funded by "at least more transparent methods and cleaner money".