Interactive Session with Dr. Partha Sarathi Shome, Former Advisor to the Union Finance Ministry & Chairman, ITRAF, Bengaluru on “Recent Tax Reforms and the Road Ahead – An Analytical View”
The Chamber organized a Interactive Session with Dr. Partha Sarathi Shome, Former Advisor to the Union Finance Ministry & Chairman, ITRAF, Bengaluru on “Recent Tax Reforms and the Road Ahead – An Analytical View” today.
Addressing the House, Dr. Shome said that “GST structure & rate does not stand on merit, if we compare this globally with other countries”. Best examples for federal tax would have been Argentina & USA.
He felt that in India GST proposals suffered from weaknesses from exemptions. Since petroleum and electricity were kept out of the purview of GST, there would no Input Tax Credit (ITC) on these products, hence these would be embedded in the prices. He said that if correct base expansion could have been done, tax rates would have come down, keeping the revenue same. Compliance burden of GST could be very high in India, he added. He was of the opinion that in India, Corporate Tax rates were also been very high, compared to many countries.
He referred to the recent Amendments in Sec 132 & 132A regarding Search & Seizure empowering the authorities not to inform the tax payer the reason for such search, in case of hidden assets of income. He felt that this was a mistake, as this would not cut down tax evasion in India, which had always been very high.
On impact of demonetization, Dr. Shome was of the opinion that this was exaggerated, as GDP in the medium term would not get affected due to demonetization. However, in the short term, GDP would get affected because of equity reasons as Rs 500 rupee notes had been in use by poorer sections also.
He cited the example of China taking a huge lead in manufacturing over the last 2 decades. This was in sharp contrast with India, where service sector accounted for almost 2/3 rds of the economy. He also mentioned that China followed the policy of depreciation of their currency for more than 25 years to make its exports competitive. This did not mean that others could do the same as quality of exports was also a very important factor, to maintain high exports in the international market consistently, he noted.
The Session was chaired by Shri Hemant Bangur, President MCCI, who gave the Welcome Address. He also released the latest book written by Dr. Shome named “Development & Taxation – 60 critical commentaries”. Prof. Dwarka Nath Bose, a noted scientist was the recipient of the 1st copy of the released book.