Will meet tax targets: Ajay Bhushan Pandey, Revenue secretary
Revenue secretary Ajay Bhushan Pandey strongly refuted criticism that the goods and services tax was the cause of the current economic slowdown, saying it was a win-win for everyone, with the incidence of taxation coming down on every commodity.
Pandey strongly refuted criticism that the goods and services tax was the cause of the current economic slowdown, saying it was a win-win for everyone, with the incidence of taxation coming down on every commodity.
He said an action plan by the committee on revenue mobilisation would be taken to the GST Council expeditiously.
“If GST had some inherent problem, then what explains the good revenue growth in the first two years of its existence? Also, in first two years of GST in the beginning even, tax rates were reduced. Reduction in overall tax rates was to the tune of Rs 1 lakh crore a year. So, therefore, to say that GST is the cause of the current slowdown, I don’t think is a fair statement,” he told ET in an interview.
Bibek Debroy, chairman of the Economic Advisory Council to the Prime Minister, recently commented that GST had been one of the major reasons for the current economic slowdown.
Pandey said businesses earlier had to comply with several taxes and several authorities. “On an average, there were like 495 forms. Now under the GST regime, the total number of forms that most people end up using right from the time of registration to filing of returns and the refund is just 14-15… there is no check post, gate pass or inspector verifying the stocks,” he said, adding that the government is quite “alive and receptive towards any suggestion for further improvement.”
“If any serious researcher is able to bring up some well-researched material, one can always look at it. But, in the absence of such analysis and with these hard facts and figures of the performance during the last two years, it is not fair to say that GST is the cause of slowdown or is causing slide in revenue collection,” he said.
Asked about rate rationalisation or a slab rejig in GST, he said one must keep in mind the revenue and budgetary requirements of the states and the Centre and ensure equity.
“It requires a calibrated approach because any sudden change that impacts revenues of the Centre or the states could actually become counterproductive. Therefore, what is required is a balanced approach looking at the revenue collection position, the revenue requirement position and also the need for rationalisation,” he said, adding that all these things have to be considered and based on that, a decision could always be taken.
“In the past two years, decisions have been taken like that and I’m sure in the future also, whenever such comfort is there, at that appropriate time, further decisions can be taken,” Pandey said.
He said the committee on revenue mobilisation had been set up because there was a need to relook at the structure.
“After having completed two years, a need was felt that we look at the things very holistically and try and see what more could be done to simplify the system and improve compliance. Under the GST system, we have seen that we need to act very fast so that businesses get relief immediately,” he said.
On bringing petroleum and electricity under GST, he said these are major items requiring consultations with the states and a study of how their revenue would be affected.
The revenue secretary said industry’s fears that a drop in collections would lead to an increase in high-pitched audits and investigations are “entirely unjustified.”
“If you see, the strength of GST system is self-monitoring and it doesn’t require any policing by any tax official,” he added.
On Direct Taxes
Asked about a cut in personal income tax, Pandey said it would depend on the impact of corporate tax reforms and tax reductions under GST during the past two years on revenue and on the budget.
“Normally, at the time of budget, such an exercise is undertaken,” he said.
On the revenue loss on account of the corporate tax rate cut, he said, “What will be the extent of deficit on account of this tax reform and current trend of collections, it will be worked out at the RE (Revised Estimates) stage. But I believe that we should be well within range,” he said.
He said the government is aware that many companies are enjoying exemptions and they may not switch to the new tax regime until the sunset period.
“But exact impact would be known only by the end of financial year,” he said.
India cut the corporate tax rate to 22% on September 20, without any exemptions or tax holidays, and to 15% from 25% for new manufacturing companies.