New GST appellate tribunal benches at 50 new locations soon: Revenue Secretary

One Nation One Tax: The country is expecting an increase of about 12 per cent in the Goods and Services Tax collections in the next fiscal. This comes at a time when the country is on a sharp growth trajectory and all eyes are on India and its growth prospectus, taxation plays a very important and key role.

In an exclusive interview with Republic Business, Revenue Secretary, Sanjay Malhotra said the increase in tax payers net has been achieved with help of digitisation.  

MSMEs contended with GST 

In the recent Interim Union Budget 2024, Finance Minister Nirmala Sitahraman spelled out that over 80 per cent respondents in a survey, which consisted of traders and  industry players, revealed that industry was contended with the threshold limit increase from Rs 20 to Rs 40 lakh. 

Reacting to revelations of the survey, the country’s Revenue Secretary said, “ This is a survey which was conducted by one of the leading consulting firms at the end of six years of GST.” 

According to the survey, more than 90 per cent, in fact, about 94 percent of the CEOs, the leaders of the industries, and almost all sectors of the economy, viewed the GST as largely positive, Malhotra added.  

“Eighty percent of them have said that it has actually helped them in reducing their logistics cost, and due to  the elimination of the tax arbitrage that was there amongst the states with the VAT and the sales tax, different rates amongst the states,” said Malhotra, adding that the removal of the barriers as a result of introduction of GST and one single rate, making it a ‘One nation, One tax, One market.”

The Revenue Secretary said the smooth transition to GST was a big win for the industry. 

“But at the same time, I would say it's a big win even for the public, especially because they are our largest, most important stakeholders,” said Malhotra, adding that the Finance Minister’s mention of  GST’s success in her Budget speech was a key takeaway. 

“I would like to draw the attention that GST has helped all the consumers because the effective tax rates, the GST rates, have actually not only brought transparency, because now you know if you are paying 12 per cent, it is 12 per cent. Previously, there was an excise duty.” Malhotra added. 

“There was a sales tax or a VAT. Then there was a luxury tax. There was an entertainment tax, and you did not know as to what effectively tax you were paying on those goods and services. So apart from that, the effective tax rate has also come down on most of the goods and services,” Malhotra further said.  

“It has been a win-win for the industry, trade, industry, and more also importantly, the revenues of both the states and the center. They are continuing to show good growth momentum. So it's a win-win for all the stakeholders,” the Revenue Secretary added. 

7 years of GST implementation 

The Revenue Secretary attributed the success of GST implementation to Prime Minister Narendra Modi and the country's trade community and the tax authority.  

“The smooth transition to GST was an objective achieved under the visionary leadership of our honourable Prime Minister. To get all the states together and to agree and to carry out this constitutional amendment and then to get it implemented, we ought to  salute the honorable prime minister,” said Malhotra. 

“The trade community of course have supported us because they were treating problems as they would be in any transformation. This is a huge transformation. So credit goes to the trade in industry and also salutations to all the tax authorities, whether it is in the state and or the center,” Malhotra said.

“The tax authorities have stuck to their guns and they have done whatever it takes to make tax compliance easy, simplified, rationalised,” said Malhotra, adding that a number of council meetings have taken place and more than 50 tax measures have been taken to streamline and simplify the taxation. 

Capital gains tax regime rejig 

Referring to the long-term capital gains tax , Malhotra said primarily because there are two different rates, one 10 per cent on assets like equity and mutual funds, equity-based mutual funds, and another 20 per cet on assets like real estate, they differ from each other. 

“ When we talk of 20 per cent, this also has the benefit of indexation due to inflation. Once that is factored in, The effective taxation is more or less similar. It's about 11 per cent or 12 per cent if one historically looks at the trends of inflation and the benefits of taxation that are passed on to such classes insofar as LTCG is concerned,” Malhotra said, adding that it is not such a major issue so far as revenues are concerned.  

“But as of now there is no such proposal for capital gains tax regime rejig . I may also mention that the Finance Minister is herself also on record to say that we are here to improve taxpayer services. Rationalisation and simplification of taxation is one of the key pillars of improving taxpayer services, whether direct or indirect taxes,” Malhotra added.  

Online gaming taxation

On online gaming being taxed at 28 per cent, the Revenue Secretary said after the GST Council decided that from October 1, 2023 there will be a specific entry, which was not there for online gaming till then, the council amended the law, provided a specific entity.

“It was decided that the tax rate will be 28 per cent and it will be 28 per cent not on each bet, but on the money. A number of times, you know, you can pay the winnings, can also be reused,” Malhotra said adding that between October to Decmber 2023, the country has got a revenue of Rs 3,470 crore rupees vis-a-vis Rs 605 crore in the three months preceding these changes. 

“ This effectively means that we gain about Rs 10,000 to Rs 12,000 crore annually. We were getting only Rs 1,600 crore. We got only Rs 1,600 crore in the year 2022-23 but in the full year of implementation, at the same rate, hopefully, if this pace continues, we should end up, the center and the state together should end up with higher tax revenues from online gaming companies by about 10,000 crore or so,” Malhotra said. 

(Interview transcribed by Anmol Nagpal)