GST rationalisation: The fine print

A day after the GST Council took the historic decision to restructure the indirect tax regime, Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal, in an interview with Monika Yadav and Asit Ranjan Mishra in New Delhi, explains some of the details. Edited excerpts:

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Now that GST rates have been significantly rationalised, do you think the GST Council should still meet frequently as mandated?

The rates that have been set should not be touched again and again. But the council doesn't meet only for rate rationalisation. Many a time clarification has to be issued or certain changes in the law may be required. So the GST Council has to be convened.

Now are you planning to resolve past tax disputes at a faster pace?

In GST, dispute resolution is time-bound and within a certain time frame the matter needs to be adjudicated. So those time limits are being adhered to.

Health and life-insurance companies are arguing that without input tax credit (ITC), their costs will rise, forcing them to absorb the burden, which means customers will not receive the full benefit of lower taxes. Will there be a rethink on allowing ITC for such insurance companies?

If some item has been exempted or is chargeable at a minimum rate of duty, ITC is not available. So once these policies are subjected to the nil rate, ITC will not be available on the inputs or input services used in providing those policies. So to that extent, yes, maybe it will get embedded in the cost or premium. Insurance companies were making some payment from ITC and some from cash. Now they will not be required to make any payment in cash. So the benefits should be passed on by them to consumers.

States are raising concerns of revenue loss. Shouldn't they be compensated?