The goods and services tax (GST) has significantly lowered the compliance burden on businesses as well as the incidence of taxation on them, revenue secretary Tarun Bajaj said, identifying a reduction in the slabs and addressing the inverted duty structure as next on the agenda for the levy that has marked four years.
“We still have issues on inverted duty structure, tax rates. The GST Council will over a period of time take a view on these. These issues have been flagged to the council a couple of times and it is cognizant of that,” Bajaj told ET in an interview. “In the next one-two meetings, we will concentrate on these issues to put these before the council to take a decision.”
Owing to Covid, the government hadn’t wanted to make too many changes in the past year, he said. Bajaj said there is a recommendation that the merger of the 12% and 18% bands should be considered. “If I look at my figures, 5% is about 22% (items), 12% is 18%, 18% is 47% these are the three main rates. These can also, over a period, be brought down to two,” he said.
Experts Red-flag Multiple Rates
Whether the 12% and 18% bands can be merged is one of the agenda items that the council will need to look into. “They (the council) will have to see as some items will go from 12 to 12-plus and some will come down. So that reaction has to be seen,” he said. Experts have said multiple rates have complicated the GST, the main feature of which is supposed to be a simple, easily administered levy all across the country.
GST, which subsumed multiple state and central taxes, was rolled out on July 1, 2017. Bajaj said the overall tax incidence under GST has come down significantly.
“Earlier, when you bought something, you never knew how much the tax was. Tax rate was almost 31% on more than 200 items, if you included value-added tax and central excise duty,” he said, adding that only 29 luxury items faced that rate now. “Tax rates have actually come down to a great extent.” Bajaj said a number of steps had been taken to ease compliance and more are lined up in the form of quarterly payments, following quarterly returns. “One of the reforms that we have done is that we introduced e-invoices, we made automatic filing of returns possible… We have already come out with quarterly returns and monthly payments,” he said.
‘QRQP Needs Discussion’
He said quarterly returns and quarterly payments, or QRQP, needs further discussion. “We would discuss it in the officials’ committee and then it would be taken up by the council,” he said, adding that the idea was to further ease the compliance burden.
Under the previous regime, businesses had to fill in hundreds of forms, he said. Also, “refunds have become automatic and with the use of tech it is becoming seamless,” he pointed out. Regarding complaints of official highhandedness, he said the government would definitely be open to looking into this and correcting it.
As part of systemic change, the department is resorting to the increasing using of technology. For instance, he said, “We are able to create a network map (with use of data from different sources) to identify a fake dealer.” Technology such as artificial intelligence has been extensively used to identify such entities.