India is working on simplifying the country’s sales tax regime by reducing the existing four GST rates to three, according to Sanjay Agarwal, chairman of the Central Board of Indirect Taxes and Customs.
“Too many rates in the goods and services tax are leading to classification disputes that need resolution,” Agarwal said in an interview on Wednesday.
Since the introduction of GST in July 2017, compliance has improved and revenue growth has stabilized, allowing the government to consider simplifying the rate structure. GST revenue has steadily increased, rising by 11.7% in the fiscal year through March 2024, and reaching 1.74 trillion rupees in June.
Agarwal mentioned that the government plans to consolidate the current GST slabs of 5%, 12%, 18%, and 28% into three rates. He assured that this restructuring would not adversely affect revenue collection and expects the changes to be implemented in the next few months.
In addition, on Tuesday, the government announced a reduction in the import duty on gold to boost employment and exports in the gems and finished jewelry sector.
“High duty was leading to smuggling,” Agarwal explained, noting that in 2023-24, the department seized 4.8 tons of gold worth nearly 2.9 billion rupees. The duty was initially imposed when the current account deficit was high, but with the deficit now manageable, the government has lowered the duty to stimulate the sector.
Regarding the 28% GST levied on online gaming introduced last year, Agarwal reported that the government has collected over 130 billion rupees from companies since October 2023.
