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No review or roll-back; GST move unanimous: Revenue Secy Sanjay Malhotra

"I don't think that the demand for these vehicles is so 'elastic' that a small tax change could impact the market drastically"

Bs_logoIndia’ revenue secretary Sanjay Malhotra
India’ revenue secretary Sanjay Malhotra
Shrimi Choudhary
5 min read Last Updated : Jul 12 2023 | 10:34 PM IST
Imposing 28 per cent goods and services tax on the entire turnover involving online gaming, casinos and horse racing was a “unanimous” decision by the GST Council, and will not need any review, says Revenue Secretary SANJAY MALHOTRA in an interview with Shrimi Choudhary in New Delhi. He expects roughly 10x higher revenue than what the government earned in 2022-23 from gaming firms if the volume remains the same. Edited excerpts:
 
Any possibility of a review or roll-back amid gaming industry concerns?

I don’t think there is any chance of a review so early on. I do not see any reason to roll back either. It was a unanimous decision by the GST Council, comprising both states and the Centre.

A few states did share their concerns over taxing the entire face value (the amount that gaming companies collect from their customers) as it could hurt the industry. But most states were empathetic and keen to understand the issue and gave the go-ahead on the proposed tax rate.

When do we see the implementation of the rule, considering it requires an amendment to the GST law?

We will attempt to get it through in the upcoming monsoon session of Parliament. It is not a major amendment and can be done. However, certain steps are involved. We are, at present, preparing a draft of the law with the approval of the Council’s fitment committee (revenue officials from the Centre and states).

The draft rule will be circulated to states, and accordingly, approval will be sought from the chairperson of the GST Council. It will then go to Cabinet and finally to Parliament for amendments. We have a short period of time. But we will do whatever is required to implement it and try to do it in this session itself.

Any definite timeline in mind?

The amendments also need to be carried out by the state government, so that could take some time. I cannot give you a definitive date, but we will try to make it effective as soon as possible. We are certain to do it in the current fiscal year (2023-24).

Any rough estimate on the revenue generation due to the change in rules?

In FY23, the government earned Rs 1,700 crore from online gaming, Rs 300 crore from casinos, and Rs 80 crore from horse racing during the same period. If the volume remains the same, one can expect about 10x higher revenue than what it earned in the last fiscal year.

Carmakers are complaining that the decision on sport utility vehicles (SUVs) will be a huge setback for the market.
We have only improved upon the earlier situation and tried to bring clarity in terms of what defines SUVs. In the absence of clarity, they were getting away with the additional cess by simply using different classifications (XUV or MUV).

Clarity was provided that, irrespective of the name by which a utility vehicle is called, it should be taxed at the same rate, subject to meeting three parameters. It was done for the sake of simplification and to do away with the persisting interpretational issues.

I don’t think that the demand for these vehicles is so ‘elastic’ that a small tax change could impact the market drastically.

Why was the sedan kept out?

A sedan was never under consideration. That is why there is no change in the compensation cess rates in the category.

Tax collected at source on credit cards is off the table.

The Department of Economic Affairs has to decide on the issue. In principle, I do believe that the mode of payment (credit card) should not be a consideration as to whether it should be treated under the liberalised remittance scheme (LRS) or not.

Rather, the purpose of sending money abroad should be determined and come under LRS. The issue of public convenience and the implementation minutiae need to be kept in mind.

Excise duty fell in the first two months of the current fiscal year. Will it meet the Budget Estimates?

Excise duty collections have shown a contraction of over Rs 75,718 crore, or 11 per cent, in the first quarter of FY23, owing to a reduction in the duty rate on petrol and diesel announced at the beginning of the earlier fiscal year. We hope to meet the Budget Estimates.

How is the response to the Central Board of Indirect Taxes and Customs’ special drive in coordination with states to curb fake registration?
 
A total of 70,700 Goods and Services Tax Networks (GSTNs) were shortlisted for physical verification to check whether they were fake registrations. Until July 9, we were able to verify 62,758 GSTNs, of which 18,006 were found to be non-existent, with a suspected tax evasion of Rs 17,308 crore. Seven arrests have been made so far.

GST has completed six years this month. When do you expect the monthly average collections to touch Rs 2 trillion, considering the new average is over Rs 1.5 trillion?

Buoyancy in GST collection is attributed to the economy, which is growing at 9.8 per cent and improved compliance, systems, and data collection mechanisms. We are not keeping any specific target, but more or less, it will grow at the same rate.

Tax revenue growth is in sync with economic growth, and a slight improvement in efficiency could take the trajectory slightly up. So the economy is moving at 10 per cent, and so we did 12 per cent, taking the tax buoyancy to 1.25 in the past five years.

Topics :GSTgaming industry

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