‘Sending signal tariffs in India are not very high’: CBIC chief Sanjay Kumar Agarwal





'Sending signal tariffs in India are not very high': CBIC chief Sanjay Kumar Agarwal

The rationalisation of tariff structure has tried to address the view that rates are very high in India. In an interview to TOI, Central Board of Indirect Taxes and Customs (CBIC) chairman Sanjay Kumar Agarwal talks about the changes undertaken in the Budget and their long-term impact: Excerpts:
The Budget announced a rationalisation of tariff structure for industrial goods. What is the message?
In the July 24 Budget, FM announced that a comprehensive review of custom duty structure will be undertaken. And, the structure will be rationalised. The objective is we have to simplify the rate structure. We have to ensure the competitiveness of Indian industry. We will have to ensure that if certain higher tariff protection is to be provided to specific sectors for a short duration, that is to be done. And, ease of doing business was also one of the objectives. So, when we conducted this exercise, we found that we can eliminate seven more rates. Earlier in 2024 Budget, we already eliminated seven tariff rates. We identified the rates, which need to be kept intact and which can be eliminated. Generally, there is a view that in India tariff rates are very high. But, if we look into the items, which are placed in these rates, are very few.
How does India’s tariff structure compare with rest of the world after this rationalisation exercise?
By doing this exercise, the average customs rate in India, which earlier was calculated as 11.65%, has come down to 10.66% now. So, it is nearer to the rates in Asean countries. So, optics about tariff structure of India has improved. Secondly, one more exercise has been done. We found that on 82 tariff lines there was cess as well as surcharge. So, we exempted the surcharge on these 82 tariff lines and wherever the effective rate was lower than the tariff rate. So, broadly the exercise has been done in this manner largely to improve the optics about the tariff structure in the country. We are sending a signal to the world that in India, tariffs are not very high. For time being, there is a cess, which has been imposed for a particular purpose, which is agriculture and infrastructure development cess. But, that cess can always be lowered.
How confident are you about meeting revenue numbers this year?
Our revised estimates have been lowered as compared to the Budget on July 24. It was Rs 16.19 lakh crore. Now, it has been revised downwards to Rs 16.02 lakh crore. We are confident that we will achieve the revised estimates, which have been fixed for indirect taxes.
What is the progress on simplification of GST rates?
The Group of Ministers (GoM) is yet to submit the report. It is far more difficult to build a consensus in GST. In customs matters, it is to be decided by the Centre but in GST, it is to be the collective consent of the Centre and the states. So, it is a more complex exercise as far as GST is concerned. But, GoM will be going into all aspects on slabs, number of slabs, how the items are placed, what is to be done to reduce the litigation and how the revenues to be raised. All these aspects have to be looked into by GoM and in due course they will submit their reports.
There is a lot of unease about the GST rate structure. Do you expect some movement on this?
Yes. The GoM should address the rate structure, especially on food items. The maximum number of disputes are related to food items and there is a need to have a simplified GST rate structure for food items.

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