Customs Duty review will continue : Sanjay Malhotra
NEW DELHI : The government will continue to review customs duty rates with the twin aims of promoting local manufacturing and exports, Revenue Secretary Mr. Sanjay Malhotra said in an interview. The centre’s revenue projection for FY24 is based on the projected economic growth rate without assuming higher revenue buoyancy, and the windfall tax on petroleum is under periodical review so that the levy applies only when there are windfall profits, Malhotra said.
In addition, the GST Council is likely to take up the issues of setting up GST appellate tribunals and the taxation regime for online gaming, horse racing and casinos at its next meeting, Malhotra said.
Below is the edited excerpts of Interview
Q : What is the basis for the central government’s revenue projections for FY24?
Revenue projections are aligned with the GDP growth numbers. That is 10.5% in terms of nominal GDP growth. Overall, we will try to get a 10.5% growth in revenue. If GDP numbers are better, then hopefully, revenues will also be better. The only issue is that we have given some tax rebates. We have not factored that in the projections, and therefore, the revenue buoyancy may be a little lower.
Q : The direct tax relief will mean forgoing revenue of around ₹37,000 crore. Will that boost consumption?
Maybe a little lower than that. It is worth it because it helps everyone in the long term when tax is simple and rates are lower because one has seen a good correlation between a simple regime, lower tax rate and better compliance. The idea is actually to give some relief. And it will help consumption.
Q : A lot of customs duty-related changes have been introduced. What is the intent?
Overall, the philosophy of customs duty changes involves two goals. One is that we want to simplify the duty structure. In that regard, we have reduced the number of tax rates. From 21, it has been brought down to 13. We have removed eight. The second thing is we would be doing a periodic review of the exemptions. So we are continuing with that. About 32 exemptions are being withdrawn in line with the policy that was announced to review these exemptions periodically. (However,) some of them (exemptions) are being extended for five years after review because we feel they are needed. Some of them are being extended for two years, and some are being extended for one year because we have not been able to actually review them as to whether we need them for a longer period. So, that review will be ongoing. The point I’m making is that these exemptions will always be reviewed. We want to minimize exemptions and keep exemptions only wherever you know they are supporting our cause. The cause is basically twofold—deepen and broaden domestic manufacturing and value addition. The other consideration is to promote exports. Sometimes, we impose an export duty, etc., to curb the volatility in prices and keep inflation in check, only essential commodities.
Q : Why was customs duty raised on items like cars?
As part of a rationalization exercise as a result of which, some rates on toys and automobiles have gone up marginally.
Q : What will be the revenue from the windfall tax on petroleum?
This fiscal, the estimate is ₹25,000 crore. What happens next year is difficult to estimate.
Q : Any chance of removing it altogether?
In the case of petrol, it has already been removed. It is subject to review every fortnight. In case we think there is windfall profit, only then will we levy windfall tax. Otherwise, it will be withdrawn.
Q : The GST cess collection has been projected to grow from ₹13 trillion this year to ₹14.5 trillion next year, which means the automobile sector will probably do well, right?
Yeah, it’s in line with the expected growth.
Q : When is a decision on setting up the GST appellate tribunal and taxation of online gaming, horse racing and casinos expected from the GST Council?
We will take it up at the next meeting. We are trying to hold the meeting early. The issue of taxation of online gaming, horse racing and casinos will also be discussed. It is for the Council to take a call.
Source : mint