Higher Taxes Impact Auto Sector, Need To Lower GST Rates: Revenue Secretary

Higher taxes on the automotive sector have a negative impact and the government needs to look at the solution, Revenue Secretary Tarun Bajaj said on Wednesday.

"I quite agree with the automotive sector. Two-wheelers and four-wheelers were not only charged 28 per cent Goods and Services Tax (GST) but we also charged cess, which is much more and as I see it will continue for two more years," he said while addressing the annual session of Confederation of Indian Industry (CII).

"So all that has a negative impact on the industry. I acknowledge that, but I do not know how to solve that issue."

However, said Bajaj, transparency has been brought into the indirect tax system and the revenue-neutral rate has come down significantly from 15.3 per cent to 11.6 per cent.

Responding to the fact that India's tax-GDP ratio has remained constant, he said the government is focused on widening the tax base for which it is not increasing taxes for existing categories of taxpayers to raise revenue.

"The government is looking at unconventional measures such as matching GST returns with income tax returns to bring the informal and the non-salaried class in the tax net," he said.

On the Taxation Laws (Amendment) Bill 2021, Bajaj said it is government policy to give a stable and predictable tax regime to facilitate corporate planning.

Bajaj said the Covid-19 pandemic has resulted in the formalization of the Indian economy. This is evident from the impressive rise in tax revenue from the sector which has helped the government to desist from making calls to taxpayers for payment of advance tax.

The corporate sector posted an excellent performance despite the pandemic which was beyond expectations, he said.