India plans to streamline its Goods and Services Tax (GST) rate structure in the upcoming months, according to Sanjay Agarwal, chairman of the Central Board of Indirect Taxes and Customs (CBIC).
“Too many rates in goods and services tax are leading to classification disputes, and that needs to be resolved,” Agarwal stated in an interview on Wednesday. He emphasized the necessity of addressing these issues to enhance the efficiency of the tax system.
The government is considering a reduction in the number of GST slabs from the current four to three. The existing rates of 5%, 12%, 18%, and 28% could be consolidated into three simplified rates. Agarwal assured that this restructuring would not adversely impact revenue collection and that the changes are expected to be implemented within the next few months.
Since the introduction of GST in July 2017, compliance has improved, and revenue growth has stabilized. This fiscal stability provides the government with the opportunity to review and simplify the tax rates. Revenue from GST has been on a consistent rise, with a reported 11.7% increase in the fiscal year ending March 2024. Collections in June reached a notable 1.74 trillion rupees.
Additionally, the government announced a reduction in the import duty on gold to stimulate job creation and exports in the gems and jewelry sector. “High duty was leading to smuggling,” Agarwal explained, noting that the department had seized 4.8 tons of gold worth nearly 2.9 billion rupees in the fiscal year 2023-24. The tax reduction follows a manageable current account deficit, allowing for measures to boost the sector.
Regarding the 28% GST imposed on online gaming last year, Agarwal revealed that the government has collected over 130 billion rupees from companies in the industry since October 2023.
These strategic moves aim to simplify the GST structure, curb tax evasion, and promote economic growth across various sectors.
