02/07/2017 9:02 AM IST | Updated 02/07/2017 9:03 AM IST

1 Lakh Suspicious Companies Deregistered Hours Before GST Rollout

PM Modi warns of dire consequences for frauds in the months ahead.

Hindustan Times via Getty Images

On the first day of the Goods and Services Tax (GST) taking effect across the country, Prime Minister Narendra Modi and Finance Minister Arun Jaitley spoke strongly about fiscal hygiene in separate events.

Jaitley dismissed concerns that the people were unhappy with the way it has been rolled out. A report in The Times of India quoted him as saying that traders had no reason to be unhappy with GST since the onus of paying excess indirect taxes lay with the customers, who were not complaining.

Instead of making taxes burdensome, GST will, contrary to what traders fear, help reduce liabilities by merging the 12% and 18% rates into one, Jaitley added.

The most important lesson of the roll-out of GST, the finance minister said, will involve a palpable change in the existing mindset of society and "a new normal" has to be created.

"If India has to move from [a] developing economy to developed economy then ... it is about time that the mindset [of the people] also became a mindset of a developed economy," he said.

Jaitley's sentiments were echoed in a speech by Prime Minister Narendra Modi.

Addressing a meeting of chartered accountants, he outlined the positive gains since the demonetisation of high-value currencies since 8 November 2016. Although the move wreaked havoc over the lives of ordinary citizens, it allegedly sounded the death knell for tax defaulters and for those who had stashed away black money in foreign accounts, the PM said.

The event in New Delhi, which started with a scuffle between people who were denied entry to listen to the prime minister and the police, heard some major revelations from the PM.

Allegedly, 300,000 companies have been identified by the government as indulging in unlawful transactions since demonetisation, of which about 100,000 companies have been deregistered, and yet another 37,000 shell companies, involved in converting black money into white, have also been traced, Modi said.

"The fate of one lakh companies has been locked with one stroke of a pen in one minute," he said, assuring that in the coming months, the government will further step up action to ensure there is a regular flow of data from the Swiss national bank to keep a check on fraudulent transactions. Modi claimed there's been a 45% drop in Indians depositing money into Swiss accounts since the noteban of last year.

Modi urged CAs not to sweat over ways of helping their clients save money but to be conscientious in their accounting, so that the money that is due in taxes to the government, and to the poor of the country, may reach its rightful claimants.

"You are as patriotic as me. Your signature is more powerful than the Prime Minister's as tax officials, government, investors take a balance-sheet on face value once you sign it. But if your audit report is incorrect or hides the truth, it's not the company that fails but the poor widow or senior citizen whose lives are destroyed because they invested their savings in the stock market or a mutual fund trusting your signature," Modi told the CAs.

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