Don't know if India ready for one GST rate, says Revenue Secy Tarun Bajaj

"On the services side, we still have a large number of exemptions. I think the CBIC (Central Board of Indirect Taxes and Customs), the GST Council, all of us in collaboration with the trade and industry (bodies) will continue to work on that and see if we can prune this list of exemptions, while we need to provide exemptions to certain categories, health sector for example," Bajaj said.

Commenting on the correction of inverted duty structures, Bajaj said while some decisions had been taken in recent GST Council meetings, more had to be done and effort on the same will continue in the next few meetings.

Five years of GST

The indirect tax system received praise and brickbats in equal measure on its fifth anniversary. According to Bajaj, five years is a "very short" period in the life of any tax structure, especially in a country as complex as India where the Centre and its administration have to work together with the states.

"It creates friction. But the fact that we have been able to get here, I am very hopeful and optimistic that most of the other rough edges, if we can address them in the next two-three years, I think then we should see a fair bit of stability in the tax rates," the revenue secretary said.

"What we are going through is an evolution… Say 5 or 10 years down the lane, I anticipate that once our economy is even larger than what it is today, maybe one or two rates - and much lower than what we are today and on a large number of products and value - would perhaps be the best thing to do on the indirect taxes," he added.

Also present at the event was Vivek Johri, chairman of the CBIC. According to Johri, the CBIC would focus on greater scrutiny and audits going forward as while the number of returns being filed had ramped up, it was now time to see the "quality" of these returns.

"I can't think of any administration that doesn't do audits. This is an area around which a narrative is built that it's very heavy in terms of compliance burden, we are getting notices from all over the place," Johri said.

"I want to assure all of you that we want to make the process easy. We don't want to be very intrusive in terms of audits and scrutiny… I am aware that the industry has concerns about being asked for loads of documents in an audit. We are trying to streamline that. So that is a very high priority for CBIC."

On the inclusion of petroleum products under the GST, Revenue Secretary Bajaj asked industrialists to also speak to states on the matter as the GST Council was not a Centre-only body.

"Maybe in the next 6 months or a year we might notice that once the revenues go up and everybody sees the benefits of GST coming to them, there may be more acceptance on this. But otherwise, we have seen that there is little traction (so far to bring petroleum products under GST),'" Bajaj said in response to a question.

"I agree that rather than trying for the whole thing, we could first maybe try for ATF (Aviation Turbine Fuel) and (natural) gas. So that's on our mind. Give us some time."

Commenting on the rising GST revenues, Bajaj said a variety of factors were driving them higher - high inflation, faster growth as the economy revived from the COVID hit with some sectors "coming back with a vengeance", increased formalisation, and improved compliance.