Union Transport Minister Nitin Gadkari on Friday said the GST (Goods and Services Tax) would increase the revenue of states by up to 25 per cent and the central government may never have to compensate them.
"We said that we would compensate states if their revenue decreases due to GST.
But I believe that situation would never arise, " Gadkari said at the Aaj Tak GST Conclave.
"In fact, revenue of the states would increase by 15 (to) 20 (to) 25 per cent, " he added.
Gadkari said the move would also simultaneously boost the revenue of the central government, which would lead to a bigger annual budget, increase in GDP and lower tax rates.
"Till now, we increased tax burden on those who paid their taxes honestly.
Now (after GST) more people would come under the tax net and tax rates would come down, " he said.
The GST regime touted as the single most significant tax reform since Independence will be implemented from July 1, Saturday.
The Minister said the new tax reform would put an end to black money.
"I hope 99 per cent (transactions) will come under formal economy which would immensely benefit the nation. "
Gadkari added that bringing petrol and diesel under the GST net would increase the revenue of the states and it was for them to decide if they wanted to move in that direction.
He urged people to be open to the new tax reform and experience it for two months, and assured that the government would make corrections if any problems arise during implementation.
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