The states had completely backed removing exemptions on many packaged food items, Revenue Secretary Tarun Bajaj said, explaining the case for the levy. He said most of the issues with GST have been solved and the government will look to address the pain points, if any, now. A rate structure review will, however, take some time, Bajaj told ET in an interview. He said tax revenue growth was robust and the government should be able to meet its fiscal deficit target. Excerpts from an interview with Anuradha Shukla & Deepshikha Sikarwar.

There has been a huge uproar about the removal of GST exemptions on many household items. Will there be a review of the decision?
First, let me explain the issue of packaged food items. Many prominent brands, I do not want to name, had given up actionable claims on their brand to avoid taxes. There was an arbitrage created. The industry had also written to us. States had also pointed out about the revenue loss because of this situation. A number of these items were taxed in states under the value-added tax regime. States were completely for this (removing exemption).

Some states like Kerala have said they will not impose tax on these items...
Businesses with a turnover of less than Rs 40 lakh crore do not have to pay tax. States are bound by subordinate legislation on rates, exemptions, and rules as per the constitutional amendment.

The GST has completed five years now. Is there a need for a review of the law? What's next?
The GST Council has in the last 2-3 meetings taken very important decisions. Council has been able to resolve most of the issues that the tax faced. Council has corrected inverted duty to a great extent. Exemptions have also been corrected to a great extent. Rationalisation of the rates is something that is left out for which we may have to wait for some time. We now need to remove any pain points that are left and felt by businesses. We have also asked the industry to tell us about the pain points so that we can look at them. And, then we should let the GST stabilise. Not change the rates too often.

Revenues have remained robust. What is your expectation going forward?
Over the last one and half years, we have worked on easing compliance. Revenues from income tax are very robust. After a 49% increase last year, I was expecting growth to revert to 14-15% but we are witnessing close to 37-38% growth.

You see the momentum continuing...
I am looking forward to very good growth in direct taxes, GST. On customs duty, we have sacrificed revenues on edible oils, pulses, and some more items because of the reduction, but will try that customs duty will also be near our budget estimate. Central excise duty collections will definitely be lower. On the income tax side, capital gains tax collections may not be as high. We have not done the exact arithmetic, but I think we should stick to the fiscal deficit.

The government raised the import duty on gold. Has there been any assessment of imports and any need to temper them?
If you are asking me in that sense (curbing imports), we have inflexible imports. For instance, crude and some commodities. We can't do anything about it. On coal, we can't do anything. Gold was something we thought we could put some burden on.

And, higher duty on gold duty continues...
Gold prices have anyways come down globally, so I do not know how much of an edge this will have.

You have spoken about a review of the capital gains tax regime. Is there a case for this?
By review, I don't mean an increase in the tax rate. There are a lot of other aberrations that need to be looked at. For instance, some assets have indexation benefits, and some do not. In case of some dividends get converted into capital gains. If you can remove all these anomalies, it will ease the taxation system. Let's see what we can do. Rate structure is something, which can also be discussed.