Kolkata: Union Finance Minister Nirmala Sitharaman said some ‘grandfathering option’ could be offered to investors who have made long-term investments, in view of the previous tax regime.
Addressing a gathering in Kolkata on Sunday, Sitharaman said, “Whenever government policies are made, there is a whole lot of grandfathering process through which you settle it. I don’t think, we will be indifferent to that or overlooking that. A lot of people who have made their commitments towards long-term investments (saving for their house and insurance) and so on… a part of governance is to administer keeping all these things in mind. It’s not as if somebody is going to deny the commitment they have made and that is why I have given the option – a twin-track option. Stay where you are or move to the new one.”
“With the twin tax system, taxpayers have wider investment options, including stock markets and debt instruments in bond markets, where returns are equal or more than traditional modes of savings,” the finance minister said a week after presenting the Union Budget in Parliament.
Shortly after her Budget speech on February 1, Sitharaman had held press conference wherein she said the government intended to remove all Income-Tax exemptions in the long run.
When asked about bringing petrol and diesel under the purview of the Goods and Services Tax (GST), she said, “This is the question which may not have a singular answer, but I will certainly try to address the issue. Even as the GST was framed and rolled out, the empowered committees had done lot of discussion on petroleum and its products. At that time, my respected late predecessor Arun Jaitelyji had made a provision. The amendment was inclusive of zero-rated petroleum products in the GST. It is already there in the GST, but at zero rates. In other words, petroleum as an item has been included without any tax on it. So, when the GST council takes a call, it will have a rate decided and the rate will be added. With the futuristic approach, whenever states will be ready to bring in petroleum under GST... another amendment may not be required and in that anticipation. Now it is up to the states and GST council together to take the call.”
On several previous occasions, Union Oil Minister Dharmendra Pradhan had said that his ministry was trying to bring petrol and diesel under the purview of the GST.
In the context of periodic changes in GST rates, Sitharaman said, “We are repeatedly telling industry (bodies) or anyone else in trade should also raise their concern with their state governments and the state minister should also voice the same concerns in the GST council. It is a federal structure, in which the GST council has a very healthy relationship. All state ministers talk freely, discuss and take a call. Now the Centre alone probably cannot go on saying we want to cut the rate here, because after all these businesses are located in states. Why won’t the sates want to speak about it? It’s going to be healthier if the states come forward with concerns.”
“When GST was introduced, extensive debates had taken place on existing rates and VAT regime and then the rates which are going to be in the GST regime. Will it be revenue neutral? All these discussions had happened. Now in the GST, you have entered into a certain level of rate and periodically changing it lead to inversion problems, refund issues and therefore, when suddenly one item’s rate on taxation is brought down, a ripple affect created. Rate reduction every three months is bringing a level of uncertainty in businesses. The government cannot make assessment on revenue generation, because it is going to change every three months. Therefore, we propose to the GST council... not formally... if we can consider a situation, where once in a year alone we should consider rate reduction and not in every three months.”
Regarding credit growth, she said, “The finance ministry is closely monitoring it, particularly in retail sector to boost consumption. We are keeping a close tab on retail lending by banks (both public and private sectors). During Dusshera and Diwali season, the government push for credit growth led to the disbursement of Rs 4 lakh crore worth retail advances across 400 districts.”
Stating the Union Budget laid the foundation to build infrastructure leading to a $5 trillion economy by 2024-25, Sitharaman said, “The foundation is laid for increasing consumption, ensuring that capex (capital expenditure) and the government’s investments will go towards spending on building of assets in infrastructure which should have cascading effects both in the short term and long term.”
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