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Washington. Implementation of the landmark Goods and Services Tax (GST) regime proposed from April 1 next year would increase India's GDP by 1-2 per cent, Finance Minister Arun Jaitley said on Thursday.
"This (GST) has the potential to push India's GDP by one to two per cent," Mr Jaitley said here, adding that the landmark constitutional amendment would immediately convert the country into a one big uniform market, which will benefit all stakeholders.
The new tax regime is scheduled to be rolled out from April 1, 2016 after the necessary constitutional amendment in the next session of Parliament.
Currently visiting Washington to attend the annual spring meeting of the International Monetary Fund (IMF) and the World Bank, Mr Jaitley was speaking on contentious taxation issues at prestigious Peterson Institute for International Economics - a think-tank.
In his effort to address the concerns of the US corporate sector related to taxation system, Mr Jaitley said his government intends to rationalise the taxation system and make the tax department friendly to the assessor itself.
The government is working hard on unaccounted money and assets, undertaking steps which include increasing cashless transactions, the minister said.
Several legislations are being brought in the coming session of Parliament. All these efforts, coupled with reforms, and increased foreign direct investment or FDI in sectors like infrastructure would collectively increase the GDP of the country, he said.
As the country has already hit 7.5-8 per cent growth, it is very much possible to achieve double digit growth, the minister said.
He assured the American corporate sector that there will be no retrospective taxation system in India, but did acknowledge that there are a few issues that his government has inherited from the previous regime
and is working to address those.
For investors to start manufacturing quickly is the biggest challenge. The minister said he has set up a group this year that is seriously considering that if all the prior permission required for setting a manufacturing base in India could be eliminated or replaced by a regulatory mechanism.
"I am hoping to make some headway in this regard," he said in response to a question.
Mr Jaitley said the government is working on an ambitious social security programme and healthcare programme. "The amendment to the land laws that we are bringing about is very significant for the growth and employment generation."
Industrial corridors running through rural areas, availability of land would be easier. This would significantly help landless people get gainful employment, he said, adding that those opposing this legislation should realise that by doing so they are opposing the landless people in India who number 300 million.
Responding to a question, the minister said the 14th Finance Commission was important for India's federalism. The 14th Finance Commission and the decision to transfer the mineral money to states has done wonders, he said.
When asked about competition from China, Mr Jaitley said the country managed 9 per cent growth rate for three decades and has reached where it is now.
India, he noted, started late and was challenged was the decision-making process in a parliamentary democracy.
"Our decision-making was relatively slower. we now realised that we have the potential for eight-nine per cent growth," he said, adding that India has a lot of distance to cover.
"At the same time there is a new confidence in India that the country can grow at a faster rate," he said.
Strategic disinvestment in some cases is part of his agenda, he said, adding that in terms of quantum of revenue generated through this process, the new Indian government is much ahead of any previous governments.
Story first published on. April 16, 2015 22:47 (IST)