PTI
New Delhi, July 5
Revenue Secretary Tarun Bajaj on Tuesday said there is scope for further pruning of the GST exemption list and expressed hope that the “rough edges” in the indirect tax regime will be ironed out in the next 2-3 years.
He further said the rise in GST collection is on account of multiple factors, like increased economic activity post-Covid, and better compliance, besides inflation.
The GST Council last week removed exemptions on a host of goods and services, including pre-packed and labelled food items, non-ICU hospital rooms above Rs 5,000 and hotel rooms below Rs 1,000. Besides, fees charged by banks for the issue of cheques (loose or in book form) and maps and charts, including atlases, too would now attract GST.
Also, the services rendered by regulators such as RBI, IRDA, SEBI, FSSAI and GST Network also would now attract GST.
“In the 47th GST Council meeting we have taken away a lot of exemptions but exemptions still remain. Work needs to be done on that. On the services side, we still have a large number of exemptions. The CBIC, GST Council, in collaboration with the trade and industry, will continue to work on that if we can prune this list of exemptions,” Bajaj said, adding there would be some categories, like healthcare, on which exemptions would have to be continued.
Addressing a CII session, Bajaj said that the GST Council had tried to address the issue of inverted duty structure (where the taxes on input exceed the levy on finished product) in the supply chain, in the case of mobile and footwear and effort will continue for correction in other sectors as well.
“I’m very hopeful and optimistic that some of the other rough edges if we can address in next 2-3 years, we can see a fair bit of stability in tax rates,” Bajaj said. The monthly GST collection crossed the Rs 1.40 lakh crore mark for the fifth time in June since its inception and the fourth month at a stretch since March 2022. Gross GST revenues rose 56 per cent year-on-year to over Rs 1.44 lakh crore in June 2022.
Bajaj said there was good buoyancy in GST revenue last fiscal and the GST Council, comprising finance ministers from the Centre and states, is cautious not to burden the common man with increased rates.
“Revenues are going up because of inflation, real GDP, compliance and economy coming back after Covid with some of the sectors coming back with vengeance. Last year’s gross GST revenue was up 30 per cent, while nominal GDP was 19.5 per cent. So there was good buoyancy. I don’t think this buoyancy can come only from inflation. But also because of compliance and formalisation,” Bajaj said.
The Secretary said the 28 per cent slab in GST contributes 16 per cent to the gross GST revenue, while the major chunk of 65 per cent comes from the 18 per cent slab.
The slabs of 5 per cent and 12 per cent contribute 10 per cent and 8 per cent, respectively, of the total gross GST revenue.
“I don’t know if India is ready to go for one rate as suggested by some. But perhaps as time passes by as we keep correcting inverted duties, and get rid of exemptions, I think, perhaps these 5 per cent, 12 per cent and 18 per cent can be the first to move into two rates,” Bajaj said.
Under the GST, a four-rate structure that exempts or imposes a low rate of tax of 5 per cent on essential items and a top rate of 28 per cent on cars is levied. The other slabs of tax rates are 12 per cent and 18 per cent.
Besides, there is a special 3 per cent rate for gold, jewellery and precious stones and 1.5 per cent on cut and polished diamonds.
Also, a cess is levied on the highest tax slab of 28 per cent on luxury, sin and demerit goods. The collection from the cess goes to a separate corpus—Compensation fund—which is used to make up for revenue loss suffered by the state due to the rollout of GST.
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