As Finance Minister Nirmala Sitharaman called for GST rate rationalisation in her Budget speech on July 23, CBIC Chairman Sanjay Kumar Agarwal pitched for a 3-tier rate structure, citing that the rationalisation should be with an aim to reduce litigation and keep rates aligned with their nature.
Sanjay Kumar Agarwal, Chairman CBIC, told CNBC TV-18, "The Budget has laid the intent to rationalise GST rates. As Chairman, I see the rates should move on a guiding principle to have one standard rate, one higher rate for items used by certain sections of the society, and one lower rate."
Pitching for a 3-tier structure, Agarwal added that "currently there are two standard rates — 12% and 18%, which should be made into one rate. Also, to end classification issues, items of similar consumption or nature should be kept in one standard rate," Agarwal said.
He further added that "for rate rationalisation, policymakers should be sitting with a broader mind to bring in ease of compliance and not lead to a rise in litigation."
The Finance Minister had also announced in her 7th consecutive Budget speech the intent to rationalise the existing customs duty structure.
Reacting to this, Agarwal said that "we will be able to come up with a revised and rationalised customs duty structure in the upcoming Budget on 1st Feb 2025."
He shared that the framework for overhauling the customs duty structure will be based on "firstly, to encourage and give impetus to domestic players and export-oriented products. Secondly, for strengthening and diversification of the supply chain. And thirdly, to correct any real inversion."
However, when asked if a dedicated panel will be looking at this task, he added, "We do not need any separate committee to study this. CBIC has a broad study and rate list ready. CBIC will now study real-time granular data to give a final shape to the new, revised custom rates, which will be proposed in the upcoming Budget."
Talking about the issue of online gaming, without divulging details, since the matter is "sub judice," Agarwal shared that the revenues from the sector have grown 4 times.
"After the GST council clarified that 28% GST will be charged on online gaming, casinos, and race courses, the revenues since then have grown 4 times. Earlier, the collections were at an average of Rs 250 crores per month and now the monthly average collections are around Rs 1150 crore. In some months, the collections rose to Rs 1350 crore also."
Further, during the ongoing candid discussion with CNBC TV-18, Agarwal on the issue of bringing petroleum products under GST said that "the government can take a graded approach" and consider bringing in industrial use petroleum products under GST to begin with.
"In my personal opinion, Crude and Natural Gas are more doable. The products used in transportation such as ATF, Petrol, and Diesel are contentious items," Agarwal added. "Considering a deep dive into the issue, it is fair to think that both states and the centre get high revenues from these products and these revenues have helped both states and the centre in times when extra revenues are needed. Thus, industry feedstock items look more possible for consideration under GST."
To be seen is how many of these actually fructify.
