Q. Mr Goyal appreciate you joining us here on CNBC-TV18 as we count down to the roll out of the GST sir. First, take us to what we should expect tomorrow in terms of the actual launch in the Central Hall of Parliament sir?
Ans. Well, I wouldn’t know the exact contours of the programme that’s being handled by the honourable Parliamentary Affairs Minister. But, broadly, it’s a celebration of probably the biggest and most transformational reform from the economic perspective that India has ever seen. It is a wonderful example of cooperative and collaborative federalism at its best that all the states in the country, and for that matter all the political parties have got together and made the constitutional amendment happen, the laws get approved in all the state assemblies. And the GST Council I think has done fantastic work over thousands and thousands of hours of painstaking, poring over tonnes of documents and data to come up with a network, with a system, which to my mind is absolutely wonderful.
Q. You know Mr Goyal, it’s interesting that you spoke of the cooperative and collaborative federalism model adopted by the GST Council, in that light, given the fact that all decisions so far on the GST, within the GST Council have been taken by consensus, they have been unanimous. Are you disappointed that the opposition has chosen not to attend, at least, as of now the launch of the GST in parliament tomorrow?
Ans. Well, I don’t think all the opposition is not coming. There may be a few parties who may choose not to come. It’s unfortunate, because I thought it’s a celebration which the people of India and all the political establishment will do together. Because it is the combined effort of all of us that we have reached this stage, we recognize that even though Mr Vajpayee started the, or introduced the thought to the nation first. But, it was truly the UPA and the honourable President of India himself who took it forward in a big way. Last 7-8-9 years, the nation has debated, discussed and come up with this robust framework that we have today on hand, everybody decided on July 1st as the launch date. Obviously, a game changing, large reform like this will take some time to mature, to get into the system, people to get used to the system. And, as I have studied it’s so simple, it’s so beautifully designed that, (a) it will not cause any distress or difficulty to anybody, (b) it will ensure compliance of taxes, more and more people are going to be encouraged to pay their taxes honestly, (c) those who do not wish to pay their taxes honestly are going to find it very difficult.
So, really we will all be able to contribute to national development, to the making of a developed India and wherever I have gone, particularly, the youth, young boys and girls in business, in trade, in industry are extremely excited that India is finally going to become a clean, honest country where everybody pays their taxes honestly.
Q. Well, that certainly is the assumption that this will increase the tax base and will also improve compliance. But, sir you talked about this being a beautifully designed system. It’s also a complex system, let’s be clear about that. So, given the fact that the first few months will see, as is with every big change, its own set of teething issues, transition troubles. Do you believe that there should be from an enforcement point of view a light touch approach that should be adopted both by the centre as well as state governments to ensure that the transition is smooth?
Ans. Absolutely, and I can assure you and your viewers that all the states in the GST Council and the central government specially when they even postpone the first return to make it happen sometime in September, the approach is that let people get a chance to understand it, get used to it so there is going to be absolutely no harassment of the people.
Q.Okay, you are saying that there will no harassment, so specifically if I may ask you about the sectors that are under your portfolio – coal and power. I know that you had several meetings with stakeholders on some of the issues that they had with the current GST rates as well as the current GST system, have most of them been allayed those concerns? My understanding after my conversation with the Revenue Secretary is that a lot of those issues have indeed been sorted out?
Ans. Absolutely, in fact, I must compliment both the honourable Finance Minister, the Revenue Secretary and all the members of the GST Council for the fact that they have really looked at the power sector with a great deal of concern, coal has been kept at the GST rate of 5%, renewable energy, equipment for solar has been kept at 5%. By and large, they have fit in all the goods at rates which mirror the current taxation structure, of course, collecting, taking the weighted average of taxes across the country on our products. So, by and large, the power sector is quite satisfied and quite happy. Couple of issues, you know, the fire ash being used to make the bricks, they had certain concerns, so there were one or two very small issues on which I am sure the GST Council will deliberate in due course whenever they get a chance and will be able to come up with a better mechanism.
Irrespective, my submission to you Shireen and to your viewers is that the good part of GST is that whatever be the rate it will be the same for everybody in the system. So, there won’t be any discrimination. It won’t be that one set of people will be at an advantage to the other. Secondly, let the time evolve. We will have data on each SSN code on each item, what is the tax collection. We have the data of the past. So, we will have the ability to verify and see that we have been fair to different sectors. If it’s found that on a particular product on a sector tax collection is significantly more or significantly less, this is an evolving journey, the GST Council can always continue to examine these issues as the days go past.
But the perfect, as Rajiv Kumar was saying in an earlier programme, the perfect cannot be allowed to be the enemy of the best or the good. So, I think it’s important that we move forward. As I said on many occasions, you can only learn to swim once you jump in the water, standing on the shore, whatsoever amount of training a teacher gives you, howsoever much you simulate the movement of your hands and legs, you do butterfly strokes or free strokes or whatever, you can only learn to swim once you get into the water.
Q. Well, we certainly are getting into the water sir, we have decided to take the plunge. But, you know, you were talking about the GST Council and how you believe the GST Council will respond to the feedback that comes in from the ground. You know, for the benefit of our viewers who are watching and this is a new mechanism, what do you believe will be the ideal situation. I mean how often should the GST Council meet, how often if at all, should the rates be revised. I would imagine that it will be done only if absolutely necessary, but, you know, as a politician and a chartered accountant, what do you believe from a prospective of stability is the need of the hour sir?
Ans. Well, I am not frankly aware of what they have decided, how frequently they will meet or what will be the procedures in the future. But two things are clear, if you look at the last few months, I think the GST Council has had a series of meetings far beyond what anybody ever imagined, each of their meetings going at times late into the night and in each of the meetings it’s only got better and better. I mean if you look at it, almost 62-63 items, the rates have been revised looking at the sensitivities of various representations that came in. So, going forward also, in the initial period, I am sure the GST Council will have quite frequent meetings, will consider the experiences that come on the table in the first few months, will look at the practical realisation of taxes on a continuous basis.
They have a fitment committee which first looks at these representations that come in, study it in the context of the current taxation, people can meet them and engage with them, put up their viewpoint to them and then that reports to the GST Council will take the final view on it. A very robust mechanism, it’s worked successfully so far and I am quite sure, going forward, the few irritants that we keep hearing about will also be placed before the GST Council. Of course, we in the central government or anybody for that matter singularly cannot do anything about this. The decisions will have to be taken collectively by the GST Council. This robust mechanism is, to my mind, a great achievement that we have been finally able to bring collective wisdom, collaboration, cooperation amongst all the states and the centre to work in the best interests of the people of India.
Q. Mr Goyal, you have your finger on the pulse of industry and you spoke of some of the irritants that you believe will get addressed in the course of time post the roll out of the GST. What to your mind are the unaddressed irritants that you believe the GST Council as well as the centre and state will move to address, the chief irritants that remain?
Ans. I honestly don’t know whether I can find any such irritants. I have also been looking up the entire process by which registration happens, by which taxes will have to be calculated. Honestly Shireen, I am impressed. Personally, I would not have been able to design anything half as good as this. I am telling you very sincerely. I had not imagined that the system would be as simple as they have made it out. There is this talk of 37 returns, why different registrations in states, each one the GST has gone through it Council and has have a very logical way of addressing these issues.
Frankly, I have run industry myself and at that point of time I used to map separate records for excise, service tax, income tax, sales tax which then became VAT, entry tax we had in Navi Mumbai, it used to be a nightmare. Now, the new system, combining 17 taxes, 33 cesses, actually, a person only has to prepare a sales register, nothing else. Everything else is automatic. So a person just enters his sales invoices once with the GSTN No. of their customer, after that the rest of purchase invoices, the calculation of taxes, all of that is largely done automatically through the programme. It will be such a simple mechanism. It will cut down paperwork and documentation hugely. There will be very little scope for harassment if you just write your sales invoices honestly and completely without trying to game the system. And all this information about 37 returns is complete hogwash, misinformation.
Q. Sir, you spoke of, you alluded to at least the anti-profiteering clause and how that could be used against people who try as you said to game the system. But there is a concern because the mechanism of how the anti-profiteering while we now know the rules, but exactly how it is going to come in to play still requires clarity. While the Finance Minister has said that he hopes that this will only be an instrument of last resort. You know, do you believe that the government could perhaps provide much more clarity on this issue to allay any remaining pending concerns on how this will be used?
Ans. Madam, we are very clear in our mind that there should be not harassment of consumers. If at all anybody faces any harassment, please approach your local representative or the local senior officials. After all, in this all political parties are together. So irrespective of which party your local representatives is from, please approach him and take his help and ensure that you don’t fall in the trap of any harassment. We have a golden opportunity to make a corruption-free trade and business in India. I would appeal to all my trader, industrialist friends that please do not fall in the trap of corruption any more. Let’s cash this opportunity to go completely legitimate. Pass on the input credit that we receive when we sell our goods, the anti-profiteering measures are kind of a deterrence. In case it comes to our notice that let’s say somebody buys a pen and he gets an input credit of Rs 10 on that pen. And if the total cost is, let’s say Rs 60 of which Rs 10 is the input credit. It may not happen that on Rs 60 he charges 18% again and makes the consumer pay Rs 73, without giving any credit for the Rs 10 for that input which he got.
Of course, there will be a profit margin, a fair return. All that is, the profit margin is the function of the market forces. But, certainly there is enough data in this system already and there will be comparable data so this triggers which will prompt anti-profiteering measures are all inbuilt in the system. There is no human being sitting and assessing where it is happening, so nobody needs to worry about it. If somebody comes and harasses you, you have all the right to ask questions of him, the basis on which he is trying to allude to any anti-profiteering and complain against anybody who is trying to harass. We will all be there. I will personally be available if anybody is harassing anybody in business under the garb of anti-profiteering, as long as, aapka daaman saaf hona chahiye. You have to come with clean hands when you come to complain.
You remember Shrireen the Jeweller’s problem. When we introduced excise? I was very much in dialogue and engaged with them and I had given my personal mobile number to all the associations that if your members get harassed as you are most worried about, contact me directly. In one year, not one person has contacted me.
Q. Okay, so that is a very welcome assurance coming in from the Minister himself. Sir, if you allow me I would like to digress from the GST for just a few minutes and ask you two additional questions which don’t really have anything to do with the GST. I just returned from Washington DC where Prime Minister Modi met with President Trump. And, according to Foreign Secretary, Mr Jayshankar, on the nuclear deal that we have with the US, the feeling or the view was that the Westinghouse bankruptcy issue may perhaps be sorted out by the end of the year and we could see some forward movement on that front. Anything that you could share with us on that?
Ans. Shireen, I really would not know much about it, because I was neither a part of the delegation there and nuclear power comes under the honourable Prime Minister and the different atomic energy department. So, my venturing to suggest anything on that would be inappropriate.
Q. Okay sir, then let me ask you about the current situation as far as Mundra is concerned, I know you have met with stakeholders. If you could give us some sense of what the road ahead looks like sir?
Ans. Look, there is a situation where we have about 10 GW or 10,000 MW of capacity which could come under stress of constraint because of the current situation. I am seized of the matter but it’s largely a situation between the procuring states and the suppliers of power. Having said that, the central government is a responsible government we have to ensure grid stability. We have to ensure low-cost power is available for all the consumers in these states also on a continuous basis. So, I had facilitated a meeting where the bankers had come in also because large amounts of loans and public sector bank money is involved in these projects. I called the state government representatives, the industry representatives, officials from government power companies who could value to the discussions, the representatives of the Central Electricity Authority, transmission ….. So I had a little bit of a interaction taking all the concerns of different stakeholders in this situation on the table and it was found wise to set up a group of experts who would discuss and find what the issues that should be taken onboard by the various states when they are addressing this challenging issue.
But we have faced many a challenge in the past and come out quite honourably and quite successfully in a very transparent manner. I am sure this issue also the states and the suppliers will be able to overcome in a most transparent and fair manner so that the consumers of India and power consumers are not put to any loss or do not have to suffer either availability of power or availability of low-cost affordable power.
Mr Goyal, always a pleasure speaking with you. Thank you very much for joining us here.
June 30, 2017 Speaking on GST at India Today MIDNIGHT CONCLAVE