GST may cause some pain in first three months, Hasmukh Adhia

This observation was made by revenue secretary, Hasmukh Adhia, in response to a query by a new channel here on Tuesday.

The Goods and Services Tax may put inflationary pressure in the first year ,in the worst case. But not after a year.

" The initial pang, however, is unlikely to last for more than three months. It is normal. After that it will be business as usual", he said.

According to him, the people in this country adopt changes very fast. So, they will adjust to the new way of life after a couple of weeks.

The new reform measure will cause revenue loss on a few items due to lower tax rate, but the loss will be offset by better compliance .

The rates on the key items are low. In fact, as much as 80 per cent items have rates below 18 per cent. Only the luxury goods and higher services like stay in five -star hotels have been put under the highest slab-- 28 per cent. All other goods and services are under five,twelve or eighteen per cent rate.

The revenue secretary did not subscribe to the view that the GST will affect direct foreign investment. " The FDI flow will remain unaffected", he believed.

He did not agree with critics of the Gross Domestic Product that it will lead to lower growth .The critics include the former finance minister P Chidambaram. There is no plan at present to change Tax Deduction at Source or any other such law, Adhia clarified.

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