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mains Test Series 2018
Q. The GST and impact: Discuss how implementation of GST will help in curbing black money.
Jul 04, 2017 Related to : GS Paper-3

Ans :

Introduction-

For all those who thought that the goods and services tax or GST was just an indirect tax reform, should want to think again. The implementation of GST is going to effect direct taxes as well, helping in widening of the tax base and increasing the taxes collections.

Impact of GST on Black Money:

  • Though it is a reform for indirect taxes, there are filers who understate incomes by not reporting each and every transaction. By doing this, they save excise, VAT, Octroi etc, and more importantly, are able to furnish under reporting of their incomes. Since, GST will have a paper trail which can be accessed by the income tax department such practices will discourage generation of black money in the system.
  • Usage of PAN and Aadhaar will be more frequent and will be required to file GST returns; this will help the income tax department to track transactions, which it is unable to do today. There can be more data mapping for audit by the revenue authorities.
  • Last year, a panel led by chief economic advisor Arvind Subramanian had said that bringing alcohol, real estate and precious metals such as gold sectors within the ambit of GST will help curb black money generation in these sectors.
  • The dual monitoring structure proposed within GST, involving the Centre and the states will also curb income tax evasions. So, even if one set of tax authorities overlooks or fails to detect evasion, there is the possibility that the other overseeing authority may not.
  • In real estate, a sector which absorbs and generates maximum amount of black money, the uniform tax structure will improve tax compliance by developers, local builders, property dealers, investors and occupiers. The mandatory paper trail that GST will create will go a long way in improving tax compliance.

Conclusion:

In a nutshell, the system drives the tax evader of out of business as no one will be willing to do business with him/her. Thus, GST strikes at the root of where black money gets generated. Can you imagine a society where bribes will be discouraged as the system tracks the money trail? Imagine a society where policies and law cannot be twisted with the use of black money! If this can be the future under GST regime, why would any individual or an organisation get differential treatment? The GST is not just a tax reform, it is truly the black money law and the biggest social reform that the country has ever seen since Independence.


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