GST to hit shadow economy: Shaktikanta Das

He said states may lose revenue in initial years, but not beyond first three years of GST roll-out

Economic affairs secretary Shaktikanta Das on Thursday said after that the goods and services tax (GST) will boost the economy and hit the shadow economy. He said GST will 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 are not required to get approval from the Rajya Sabha.

Now, the GST Council will take up rules on Friday and a committee of officers the specific rates next month. The GST is likely to be rolled out from July 1.

Das said GST Council will move really fast now.

He said that states may lose revenue in initial years, but he did not expect the losses to go beyond the first three years of the GST roll-out.

In any case, he said there is a compensation mechanism for the first five years of the roll out of GST and that 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 to the tune of Rs 50,000 crore is needed a year.

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