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NEW DELHI: The goods and services tax (GST) collection of states was 13% lower than the projected level, although there was improvement in the overall receipts, with six states staying ahead of the April-August target. “Optically, some facts surface that create an impression but it may be different from reality,” finance minister Arun Jaitley said after a review of the revenue position, adding that the deficit had come down from last year’s level of 16%. “We are hopeful that it will be a percent or two lower (this year),” FM added after a meeting of the GST Council.
For instance, 2015-16 was the year when Bihar introduced prohibition and it imposed additional VAT to recover some of the losses. Similarly, Punjab, which is one of the laggards, used to impose a cess on grain procurement, apart from one to fund infrastructure creation, which bloated its revenues. During 2015-16, it collected Rs 14,500 crore, of which the cesses contributed Rs 3,000 crore. After the introduction of GST, all these levies have been abolished.
Puducherry and Himachal Pradesh were entitled to a higher share of central sales tax, while the growth in their own tax collection was lower. “Puducherry’s tax collection grew 5-6% in 2015-16, while we have promised 14% growth. So, there will always be a gap,” explained an official. At the council meeting, revenue secretary Hasmukh Adhia submitted a report based on a review of five states.
In fact, some of the states are “short of target”, despite filing of returns being high in states such as Punjab and Himachal Pradesh. Jaitley said the North East had been a big gainer from GST as was Andhra Pradesh. Asked about the Centre’s budgeted GST collections of Rs 13 lakh crore, the minister said it will try to “come as close as possible” and indicated that factors such as a good festival season could boost collections.
Barring Delhi, which is 19% below the target, almost all other states are better placed than last year, officials said. For instance, the “deficit” in Bihar had come down from 38% during the last financial year to 20% so far this year.
The target is based on 2015-16 collection of VAT and other levies, with a 14% annual growth budgeted for every year. The Centre has promised to compensate states for any shortfall below the assumed 14% growth. While Jaitley assured that the promise will be met, officials pointed out that due to some “structural” reasons some of the states had a higher base, resulting in a “shortfall” now.
For instance, 2015-16 was the year when Bihar introduced prohibition and it imposed additional VAT to recover some of the losses. Similarly, Punjab, which is one of the laggards, used to impose a cess on grain procurement, apart from one to fund infrastructure creation, which bloated its revenues. During 2015-16, it collected Rs 14,500 crore, of which the cesses contributed Rs 3,000 crore. After the introduction of GST, all these levies have been abolished.
Puducherry and Himachal Pradesh were entitled to a higher share of central sales tax, while the growth in their own tax collection was lower. “Puducherry’s tax collection grew 5-6% in 2015-16, while we have promised 14% growth. So, there will always be a gap,” explained an official. At the council meeting, revenue secretary Hasmukh Adhia submitted a report based on a review of five states.
In fact, some of the states are “short of target”, despite filing of returns being high in states such as Punjab and Himachal Pradesh. Jaitley said the North East had been a big gainer from GST as was Andhra Pradesh. Asked about the Centre’s budgeted GST collections of Rs 13 lakh crore, the minister said it will try to “come as close as possible” and indicated that factors such as a good festival season could boost collections.
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