In a significant move to streamline the Goods and Services Tax (GST) structure, India is planning to reduce the number of tax slabs from four to three. This initiative aims to resolve classification disputes arising from the current multiple rate system, Sanjay Agarwal, Chairman of the Central Board of Indirect Taxes and Customs, said in an interview on Wednesday.
"Too many rates in goods and services tax are leading to classification disputes and that needs to be resolved," Agarwal told Bloomberg, emphasizing the need for a simplified system. Since its introduction in July 2017, GST compliance has improved, and revenue growth has stabilized, providing the government an opportunity to reassess and simplify the tax structure.
GST revenue has shown consistent growth, rising by 11.7% in the fiscal year ending March 2024. The collections reached an all-time high of Rs 2.10 lakh crore in April 2024. Agarwal highlighted that the proposed restructuring of the GST slabs—consolidating the current rates of 5%, 12%, 18%, and 28% into three categories—will not adversely affect revenue collection. He assured that this reformation is set to be completed in the coming months.
She also announced a reduction in import duty on gold to enhance job creation and boost exports in the gems and jewelry sector. “High duty was leading to smuggling,” Agarwal explained, noting that 4.8 tons of gold valued at nearly Rs 290 crore were seized by the department in 2023-24. The tax was initially imposed to manage a high current account deficit, which is now under control, allowing for the reduction to stimulate the industry.
On the topic of the 28% GST imposed on online gaming last year, Agarwal told Bloomberg that the government has collected over Rs 13,000 crore from companies since October 2023.
The proposed changes in the GST structure and the reduction in import duties are part of India's ongoing efforts to create a more efficient tax system while supporting key sectors of the economy.
Source Name : Economic Times