GST to hit shadow economy: Shaktikanta Das

The indirect tax regime would also raise GDP growth by 1.5-2 percentage points

Economic Affairs Secretary Shaktikanta Das on Thursday said the goods and services tax (GST) would hurt the shadow economy.
 
The indirect tax regime would also raise gross domestic product (GDP) growth by 1.5-2 percentage points.
 
The Lok Sabha on Wednesday passed the four GST Bills — relating to the Centre, Union territories, inter-sale movement and compensation. Being money Bills, these do not require Rajya Sabha approval.
 

The GST Council will now discuss rules on Friday and a committee of officers will discuss specific rates next month. The GST is likely to be rolled out from July 1.

 
Das said the GST Council would get into action mode now. He said that states might lose revenue in initial years, but he did not expect the losses to go beyond the first three years of the GST being rolled out. In any case, he said, there was a compensation mechanism for the first five years.
 
States will get full compensation to offset the losses. For this purpose, a cess will be imposed on sin and luxury goods over the peak rate of 28 per cent. It is estimated that the compensation of Rs 50,000 crore is needed a year.

 
He said the focus would now be on building robust firewalls for securing GST networks.