 "Sanjay Kumar Agarwal, chairman of the Central Board of Indirect Taxes and Customs (CBIC)")
Sanjay Kumar Agarwal, chairman of the Central Board of Indirect Taxes and Customs (CBIC)
The Central Board of Indirect Taxes and Customs Chairman Sanjay Kumar Agarwal says there has been a fourfold increase in the goods and services tax (GST) collections from online gaming to Rs 1,150 crore every month. In conversation with Asit Ranjan MishraAggarwal explains the rationale behind the Customs duty cuts on silver and gold, among other Budget provisions. Edited excerpts:
The finance minister talked about a comprehensive review of the rate structure over the next six months. What is the expected outcome of this exercise?
This exercise will be carried out, and the outcome will be reflected in the next year’s Budget. We will review the Customs duty rates on various items, and wherever a correction is needed, it will be implemented in this exercise.
In the past five to six years, Customs duties have gone up significantly. Are we looking at a course correction from here on out?
Customs duties have increased where necessary, due to requirements such as phased manufacturing programme or tariff protection for the industry.
Tariffs are typically kept at reasonable levels; I don’t want to increase them to very high levels because it could make the industry complacent and less competitive.
While high tariffs may serve domestic demand, they could hinder export competitiveness. Duties were raised based on the needs at the time, but given the current circumstances, duty rates can definitely be lowered. This will be done on a case-by-case basis.
The finance ministry has been resisting Customs duty cuts on gold and silver for a long time. Why the sudden sharp cut from 15 per cent to 6 per cent now?
The higher duty on gold was implemented in July 2020 due to a worsening current account deficit (CAD) caused by rising international crude prices. CAD, which was around 2 per cent of gross domestic product (GDP) in 2022-23, dropped to 0.7 per cent in 2023-24 (FY24) and even turned into a surplus in the last quarter of that year.
We also noticed that the increase in duty did not yield the expected revenue, partly because gold was being imported in forms other than bullion under various free trade agreements. So the revenue increase, which should have happened with that increase in the rate of duty, did not rise to that commensurate level. Also, there was an increase in gold smuggling, with 4.8 tonnes of gold seized by Customs in FY24.
The gems and jewellery sector had also been advocating for a duty cut since gold is their primary raw material, and high duties lead to capital being tied up. The jewellery manufacturing sector is crucial for the country, providing employment and contributing to GDP and exports.
How much is being collected through GST on online gaming?
We collect on average Rs 1,150 crore every month from online gaming. In some months, collections have exceeded Rs 1,350 crore.
Before the recent amendments, the average monthly collection was around Rs 250 crore, so it has gone up nearly fourfold and remains steady. Some months see even higher revenues, providing a steady revenue stream from online gaming.
Why has the finance ministry stopped the release of monthly data?
We are not issuing press releases for other taxes, such as central excise duty or Customs duty collections.
Is this not against the practice of transparency?
No, there is still transparency because these figures are public. Now that GST has stabilised and it has been seven years, we don’t issue press releases for other taxes. The practice has been consistent.
But for direct taxes, is it being released?
I am referring to indirect taxes. The Centre has stopped issuing press releases for GST collection figures.
The Economic Survey has discussed making granular GST data available for a better understanding of the economy.
The data is available. Revenue collection figures are always public and go into public accounts. There is no specific reason for not releasing it, but since indirect tax figures are not being released, we are treating GST data in the same manner.
But when practice is stopped…
I believe I have answered that.
First Published: Jul 26 2024 | 12:39 AM IS