After over three decades in the Indian Administrative Service, Revenue Secretary Tarun Bajaj will superannuate on November 30. The outgoing officer spoke to businessline on various issues ranging from the GST roadmap to overall tax collection. Excerpts:
Q. What will be the roadmap for GST?
We have come a long way in making improvements to GST. Compliances have strengthened; some exemptions are yet to be removed. There are some products on which we still have inverted duty structure (IDS) which causes problem in an indirect tax regime. A lot of them have been corrected but a few are still left.
The other thing is, we had a revenue-neutral rate of 15.3 per cent and now it is at 11.6. This does not mean raising the rates, rather since revenues have gone up, there may be a need to rationalise the rates and also the number of rates. In a broad context, this is the agenda.
Then there are smaller agenda items such as finalising GST rates along with base for online gaming, casinos and horse racing. Setting up of a GST Appellate Tribunal is another important aspect in terms of easing the pressure on courts and also helping assessees. Some of these will happen immediately but some others will take a mid-term approach.
Q. Will reports by GoM on online gaming, casinos and horse racing and another on GST Appellate Tribunal be taken up during the next meeting of the council?
I am not sure when it will be taken. It will depend on whether GoMs submit their recommendations, the kind of recommendations they give and whether these can be included in the agenda. But if not in the next meeting, then maybe in the one after that. We may also have to confront the situation of no consensus in the GoM. So far, various GoMs have given a categorical view on any aspect. In case it does not happen, the council will decide.
Q. Do you think the time has come for GST rate rationalisation?
Perhaps there is a need to wait for some more time. Firstly, inflation is high across the world. Secondly, there is a war going on. And there might be some other issues in the US and European economies which will have some impact on us.
Q. You have always advocated for restructuring of capital gains mechanism and to make it simpler. What can we expect now, considering the problems faced by taxpayers?
I don’t think there are any such issues except that the regime is very complex. That is why after the last Budget I had said perhaps there is a need to simplify this. We have too many rates and periods. We have indexation in some and not in others. We have financial assets and some non-financials assets. All these need to be looked into.
The idea is that if we simplify, it will be easier for the taxpayer and also us. It may be a revenue-neutral exercise and may not involve any tinkering or a desire to collect more taxes through capital gains. But if you simplify, it will make life much easier.
Q. At present, we have two tax structures – the old one with exemptions and the new one without them. We believe there is not much response to the latter. Is there a thinking to just stick to the old one?
It will not be proper for me to respond to that as I am not involved in the Budget-making process but people who are there will have a look. I can tell you about the problem in the new regime. The tax kicks in after ₹2.50 lakh on income while in the older regime, it was beyond ₹5 lakh. If one takes the exemption, the tax will kick in after ₹6.5 lakh or ₹7 lakh, and a large proportion of the taxpayers fall in this category between ₹2.5-7.5 lakh. So, if they are in the old regime, they will pay no taxes, but if they are in the new regime, they will have to pay some. So, obviously people will not prefer the new regime. There is a need to have a rethink on this, but only officers who are involved will take a decision.
Q. Considering the current trend of direct and indirect tax collections, how optimistic are you of achieving the Budget target?
We will not only achieve those targets (₹14.40-lakh crore for direct taxes; ₹13-lakh crore for indirect taxes), we will exceed by a good margin. Our direct taxes should be up 25-30 per cent over FY22, which is very healthy considering the 49 per cent growth last fiscal.
On the indirect taxes front, we gave relief on customs and excise duty. In spite of that, our expectation is that collection will exceed Budget estimates by a good margin. Overall, the taxes should be good and the buoyancy that has been seen on the direct taxes and on GST is very healthy. We expect the revenue to shoulder the Centre’s fiscal burden again.
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