Scope for further pruning of GST exemption list: Revenue secretary

NEW DELHI: Income secretary Tarun Bajaj on Tuesday stated there’s scope for additional pruning of the GST exemption listing and expressed hope that the “tough edges” within the oblique tax regime might be ironed out within the subsequent 2-3 years.
He additional stated that the rise in GST assortment is on account of a number of elements, like elevated financial exercise post-Covid, and higher compliance, in addition to inflation.
The GST Council final week eliminated exemptions on a number of products and providers, together with pre-packed and labelled meals gadgets, non-ICU hospital rooms above Rs 5,000 and lodge rooms beneath Rs 1,000. Moreover, charges charged by banks for the difficulty of cheques (unfastened or in e book type) and maps and charts, together with atlases, too would now appeal to GST.
Additionally, the providers rendered by regulators comparable to RBI, IRDA, SEBI, FSSAI and GST Community additionally would now appeal to GST.
“Within the forty seventh GST Council assembly we have now taken away loads of exemptions however exemptions nonetheless stay. Work must be achieved on that. On the providers facet, we nonetheless have a lot of exemptions. The CBIC, GST Council, in collaboration with the commerce and business, will proceed to work on that if we are able to prune this listing of exemptions,” Bajaj stated, including there can be some classes, like healthcare, on which exemptions must be continued.
Addressing a CII session, Bajaj stated that the GST Council had tried to handle the difficulty of inverted responsibility construction (the place the taxes on enter exceed the levy on completed product) within the provide chain, within the case of cell and footwear and energy will proceed for correction in different sectors as effectively.
“I am very hopeful and optimistic that a few of the different tough edges if we are able to deal with in subsequent 2-3 years, we are able to see a good bit of stability in tax charges,” Bajaj stated. The month-to-month GST assortment 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 stated there was good buoyancy in GST income final fiscal and the GST Council, comprising finance ministers from the Centre and states, is cautious to not burden the widespread man with elevated charges.
“Revenues are going up due to inflation, actual GDP, compliance and financial system coming again after Covid with a few of the sectors coming again with vengeance. Final 12 months’s gross GST income was up 30 per cent, whereas nominal GDP was 19.5 per cent. So there was good buoyancy. I do not suppose this buoyancy can come solely from inflation. But in addition due to compliance and formalisation,” Bajaj stated.
The secretary stated the 28 per cent slab in GST contributes 16 per cent to the gross GST income, whereas the most important 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 eight per cent, respectively, of the whole gross GST income.
“I do not know if India is able to go for one fee as advised by some. However maybe as time passes by as we maintain correcting inverted duties, and do away with exemptions, I feel, maybe these 5 per cent, 12 per cent and 18 per cent will be the primary to maneuver into two charges,” Bajaj stated.
Below the GST, a four-rate construction that exempts or imposes a low fee of tax of 5 per cent on important gadgets and a high fee of 28 per cent on vehicles is levied. The opposite slabs of tax charges are 12 per cent and 18 per cent.
Moreover, there’s a particular 3 per cent fee for gold, jewelry and treasured stones and 1.5 per cent on minimize and polished diamonds.
Additionally, a cess is levied on the best tax slab of 28 per cent on luxurious, sin and demerit items. The gathering from the cess goes to a separate corpus — Compensation fund — which is used to make up for income loss suffered by the state because of the rollout of GST.