GST will send strong signal to global investors: Montek

Our Bureau
Share  ·   Comment   ·   print   ·  
Strategy talks: Deputy Chairman of Planning Commission Montek Singh Ahluwalia (left) and C. Rangarajan, Chairman, Madras School of Economics and Chairman, Economic Advisory Council of the Prime Minister, at the Dr Raja J.
Chelliah Memorial Lecture, in Chennai on Thursday. — Bijoy Ghosh
Strategy talks: Deputy Chairman of Planning Commission Montek Singh Ahluwalia (left) and C. Rangarajan, Chairman, Madras School of Economics and Chairman, Economic Advisory Council of the Prime Minister, at the Dr Raja J. Chelliah Memorial Lecture, in Chennai on Thursday. — Bijoy Ghosh

‘Political parties are coming together on Goods & Services tax, but some gaps remain’

Implementing the Goods and Services Tax (GST) is the best signal India could send out to global investors that the country “is open for business”, according to Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Delivering the first Dr Raja J Chelliah Memorial Lecture, organised by the Southern India Chamber of Commerce and Industry and the Madras School of Economics, here on Thursday, Ahluwalia said an efficient tax regime is key to sustaining government revenue for social and physical infrastructure development and a sustainable fiscal policy.

Tax reform

Bringing in GST is the most important tax reform that is needed along with bringing down customs duty in a globalised economic environment. Political parties are coming together on implementing GST, but some gaps remain, he added.

It is important that the tax treatment is “globally accepted as reasonable” and there is consistency in tax policy to instil investor confidence. With multinational companies setting up subsidiaries here and Indian companies going abroad, tax administration and calculations should be aligned globally. Rules on transfer of funds between parent companies and subsidiaries should be clear, Ahluwalia said.

Tax rates should rule low across a wide span of products and services with little inter-product differentiation – fewer slabs.

Role of Private sector

The private sector’s role in driving tax reforms is important, he said. Every year, industry associations’ representations go into the nitty-gritty of tax rates. Instead, they should seek an increase in tax rates where they are below ideal and decreases where they are high.

Globally, countries are moving away from customs duties and focussing on increasing revenue from domestic taxes. With India entering into a free trade agreement with ASEAN, which will mean nil import duties on goods and services from the region, and a similar initiative expected with South Korea and Japan, the overall duty has to be brought down to prevent diversion of trade, Ahluwalia added.

The present quality of human capital cannot sustain high economic growth rates in the long run. The average number of years of education in India is less than five. Public investment is needed in education, healthcare, infrastructure and other government social expenditure. Subsidy expenditure should be disciplined and universal coverage of benefits avoided ensuring the poor benefit, Ahluwalia said.

Countries across the globe are moving towards direct cash transfer of subsidies, which ensures targeted delivery of benefits without leakage. State Governments should not be allowed too much flexibility in this issue and those governments that want to go ahead with direct transfer should be allowed, he said.

(This article was published on December 26, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.
Please Wait while comments are loading...
This article is closed for comments.
Please Email the Editor

Union Budget 2014-15 Highlights

  • Following are the highlights of the Union Budget 2014-15 presented by Finance Minister Arun Jaitley in Parliament on July 10, 2014
  • Income-tax exemption limit raised by Rs 50,000 to Rs 2.5 lakh and for senior citizens to Rs 3 lakh
  • Exemption limit for investment in financial instruments under 80C raised to Rs 1.5 lakh from Rs 1 lakh.
  • Investment limit in PPF raised to Rs 1.5 lakh from Rs 1 lakh
  • Deduction limit on interest on loan for self-occupied house raised to Rs 2 lakh from Rs 1.5 lakh.
  • Committee to look into all fresh tax demands for indirect transfer of assets in wake of retrospective tax amendments of 2012
  • Fiscal deficit target retained at 4.1% of GDP for current fiscal and 3.6% in FY 16
  • Rs 150 crore allocated for increasing safety of women in large cities
  • LCD, LED TV become cheaper
  • Cigarettes, pan masala, tobacco, aerated drinks become costlier
  • 5 IIMs to be opened in HP, Punjab, Bihar, Odisha and Rajasthan
  • 5 more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
  • 4 more AIIMS like institutions to come up in AP, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP
  • Govt proposes to launch Digital India’ programme to ensure broad band connectivity at village level
  • National Rural Internet and Technology Mission for services in villages and schools, training in IT skills proposed
  • Rs 100 cr scheme to support about 600 new and existing Community Radio Stations
  • Rs 100 cr for metro projects in Lucknow and Ahmedabad
  • Govt expects Rs 9.77 lakh crore revenue crore from taxes
  • Govt’s plan expenditure pegged at Rs 5.75 lakh crore and non-Plan at Rs 12.19 lakh crore.
  • Rs 2,037 crore set aside for Integrated Ganga Conservation Mission called ‘Namami Gange’
  • Kisan Vikas Patra to be reintroduced, National Savings Certificate with insurance cover to be launched
  • FDI limit to be hiked to 49% pc in defence, insurance
  • Disinvestment target fixed at Rs 58,425 crore
  • Gross borrowings pegged at Rs 6 lakh crore
  • Contours of GST to be finalised this fiscal; Govt to look into DTC proposal.
  • ‘Pandit Madan Mohan Malviya New Teachers Training Programme’ launched with initial sum of Rs 500 crore
  • Govt provides Rs 500 crore for rehabilitation of displaced Kashmiri migrants
  • Set aside Rs 11,200 crore for PSU banks capitalisation
  • Govt in favour of consolidation of PSU banks
  • Govt considering giving greater autonomy to PSU banks while making them accountable
  • Rs 7,060 crore for setting up 100 Smart Cities
  • A project on the river Ganga called ‘Jal Marg Vikas’ for inland waterways between Allahabad and Haldia; Rs 4,200 crore set aside for the purpose.
  • Govt proposes Ultra Modern Super Critical Coal Based Thermal Power Technology
  • Expenditure management commission to be setup; will look into food and fertilizer subsides
  • Impasse in coal sector will be resolved; coal will be provided to power plants already commissioned or to be commissioned by March 2015
  • Long term capial gains tax for mutual funds doubled to 20%; lock-in period increased to 3 years
  • Rs 4,000 cr set aside to increase flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.
  • EPFO to launch the ‘Uniform Account Number’ service to facilitate portability of Provident Fund accounts
  • Mandatory wage ceiling of subscription to EPS (Employee Pension Scheme) raised from Rs 6,500 to Rs 15,000
  • Minimum pension increased to Rs 1,000 per month
  • Union Budget 2014: List of products getting cheaper/ costlier

  • Finance Minister Arun Jaitley today spared the common man from price hikes by keeping duties on commonly used day-to-day items unchanged but made it costlier for smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2014—15.
  • Following is a list of what will be cheaper and costlier:
  • CRT television
  • LED/LCD TVs especially below 19 inch
  • Footwear priced between Rs 500 to Rs 1,000 per pair
  • Soaps
  • E—book readers
  • Desktop, laptops and tablets
  • RO based water purifiers
  • LED Lights, fixtures and lamps
  • Pre forms of precious and semi—precious stones
  • Sports Gloves
  • Branded petrol
  • Matchbox
  • Life micro insurance policies
  • HIV/AIDS drugs and diagnostic kits
  • DDT insecticides
  • Cigarettes
  • Aerated drinks with sugar
  • Pan masala
  • Gutka and chewing tobacco
  • Jarda scented tobacco
  • Radio Taxi
  • Imported electronic products
  • Portable X—ray machines
  • Half cut/broken diamonds.


    Exchange Rate

    Dollar Spot Forward Rate

    Open-Ended Mutual Funds

    MCX-SX Currency Futures

    NSE Currency Futures



    Recent Article in Economy

    Income from Alternate Investment Fund to be taxed at 30%

    Trustees of the fund will be taxed if investors are not named »

    Comments to: Copyright © 2014, The Hindu Business Line.