What is the roadmap ahead for exemptions that still remain within customs?
Review of exemptions happen every year in the budget. What we have done this time is to do a deeper review. By that I mean we held very wide-ranging consultations. On that basis we have withdrawn some exemptions. We have kept some on hold where we did not get very concrete inputs, but we’ve prescribed a timeframe. All conditional exemptions will be up for review, otherwise they just lapse. We are trying to build unconditional exemptions as far as possible into the tariff itself. It provides more transparency and certainty to the tax because it’s not so easy to change tariff rates. It’s much easier to change rates that you operate through notification.
What is the revenue impact of these changes?
For many years now we’re not looking at customs as a source of revenue. It is mainly meant to provide some degree of support or protection to the domestic industry, for manufacturing, for exports for MSMEs. When we were working on the proposal this year, we were not really looking at revenue augmentation through customs. Withdrawal of exemptions is driven more by policy consideration.
GST collections have stabilised now. What can now be expected in terms of GST structure?
The rationalisation exercise would involve restructuring of the rates. It may involve a review of exemptions. And in the bargain, correction of inversions, whatever is left. Those are three broad aspects that I see as being part of the rationalisation exercise. Personally, if you ask me, I don’t see all these happening together at one go. You have to think of how to arrive at something that does not disrupt your revenues and, in fact, augments your revenues. There are positives and negatives in terms of revenue when you rejig the rates.
Now, that will be a difficult exercise to achieve. We may have some sort of a roadmap available on what should be done and that is what the GoM (group of ministers) will look at. In terms of processes for the central GST, there are two things that we need to work on with great rigour – scrutiny of returns and audit. We already achieved significant improvement in return filings, but now we have to look at what is the revenue yield from the returns and if the tax was being correctly paid or not. These are the two things CBIC is going to focus on in the coming year. This, of course, is not dependent on rationalisation. This should happen regardless.
The finance minister has announced a revamp of the Special Economic Zones Act. From the customs side what are the changes likely?
What businesses are telling us is that while customs has done a lot of work on ease of doing business, these benefits have accrued to the non-SEZ entities, and SEZ units have been left out of their benefit.
They don’t use the ICES (Indian Customs EDI System). The basic filing on SEZ is online, no doubt, but there are a lot of contact points in that procedure. Permissions have to be taken from time to time. They have to apply for renewing them; goods are examined most of the time.
We have to work out the details. We want to migrate all the SEZ units to the customs portal, so instead of working through SEZ online, all their filings will happen on ICES itself. So, whatever benefits that flow from it to normal importers and exporters will also be available to SEZs. We will look at other business processes with regards to customs and we will re-engineer them to ease compliance.
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