The lockdown showed our system works: Finance Secretary
“Economic activities are now picking up. Even as Covid is there, people are learning to live with Covid and carry out their economic activities,” said Finance secretary Ajay Bhushan Pandey.
Finance secretary Ajay Bhushan Pandey, the top bureaucrat on revenue matters, spoke to Rajeev Jayaswal about the Goods and Service Tax (GST) journey so far, and the road ahead. Edited excerpts:
This is the third anniversary of the launch of biggest indirect tax reform. How do you reflect on the past three years of GST regime, and what’s next?
If you look back, prior to the GST era, there were 17 different [indirect] taxes, 9-10 different types of cess. Various other taxes were imposed by multiple tiers of government -- say Octroi, entertainment tax. All these have been merged in one under GST – ‘One Nation, One Tax, One Network’. Every month more than 1 crore tax returns are filed and approximately Rs 1 lakh crore is collected. The entire thing is completely objective, transparent and faceless. This is a major, major tax reform, unprecedented in the world in terms of magnitude.
Now the question is, can we do something more? The answer is definitely yes. We should continue to improve taxpayers’ convenience and also make their life very, very simple. Problems of multiple [returns] filing have been already resolved, but more can be done. There had been some technical problems. In such a large system, such problems will arise, but our job is to ensure that such problems are attended to at the earliest and these problems should not reoccur.
Some critics point out that GST is yet to stablise because rates are not yet completely rationalised, and the Council is still working to fix the inverted duty structure. Has GST not fully evolved?
We can’t say that GST has not yet fully evolved. When GST was introduced, a through exercise was conducted. On various commodities, what were the pre-GST [tax] rates? It was found that in most of the items the rate was more than 31%. Then studies were conducted, what would be the GST neutral rate? It was something around 16-17%. In GST, large numbers of items were exempted from tax to provide relief to the poor and lower middle-class. Lots of items were put on 5%; then other slabs were 12%, 18% and 28%. Over a period of time, based on some suggestions, tax rates on some finished goods were brought down, which resulted in an inverted duty structure. The GST Council is deliberating on it and it will take appropriate decision in appropriate time.
GST collections, which slipped by about 72% in April and 38% in May due to the nationwide lockdown, saw some recovery in June. Does this indicate that the economy is coming back on track?
Some tax of previous months would have also been paid this month also because some taxpayers could not pay during the lockdown period -- but there is an increasing trend in GST revenue collection. Economic activities are now picking up. Even as Covid is there, people are learning to live with Covid and carry out their economic activities. It also shows that during this period, our GST system was working, which allowed people to file returns, because it is completely an online system.
Do you expect a better collection in July?
Hopefully it will be on the rising trend, because economic activities have increased compared to April and May. We should be getting more taxes than what we got in the last three months.
