State GST collection was Rs 14,900 crore between April and August last year
The tax income from State Goods and Services Tax (SGST) in Gujarat for the five months of the current financial year, stood at Rs 14,642 crore almost stagnant – rather a minor drop – compared to last year’s SGST collection of Rs 14,900 crore witnessed during the corresponding period in the previous fiscal. Experts said that if the tax revenue does not increase as projected in the state budget, the state government will have to rely more on the central government to meet the shortfall.
According to a data of State Commercial Tax department, net GST collection stood at Rs 14,642 crore during the period while tax revenue from Value Added Tax (VAT) on goods not subsumed under GST stood at Rs 8,827 crore during April – August of 2019-20, against net GST revenue of Rs 14,900 crore and VAT income of Rs 9,200 crore.
“We have maintained the GST income of the last year,” said a senior official of the department. He acknowledged that there is also a dip in income of VAT, but he attributed it to settlement of a case of refund, where ‘a large sum was given as a refund’. The official was upbeat on the settlements, Gujarat has got in Integrated GST or IGST. The state has received Rs 1,100 crore in July and Rs 840 crore in August. “Last year we got an average of about Rs 400-500 crore per month as IGST settlement. On the basis of figures of IGST, we are hopeful that the final tally will rise,” said the official. He also said that under GST, consuming states will have higher tax revenues while manufacturing states will witness a decline. “Since Gujarat is a manufacturing state, our incomes are not rising as fast as other consuming states,” he informed.
Ahmedabad-based professor of Economics at HK Arts College said that stagnancy in GST revenue is an indication that there is severe slowdown in the economy of the state. “In the annual budget for financial year 2019-20, the state government had pegged a monthly rise of Rs 500 crore in SGST. So in five months of the fiscal, it should be Rs 2,500 core higher than the previous year. On the other hand their actual loss of Rs 256 crore. The decline in tax collection is because of overall economic slowdown,” Shah told DNA.
Shah pointed out that the implications of stagnating revenue will be severe for the state government as it will have to either increase the debt to meet the expenses or cut down on spending to adhere to the deficit requirement. “If the government takes more debt, the state debt will rise and if cuts down on expenditure, welfare schemes are mostly likely to witness spending cuts,” he said.
Under GST, it is expected that tax revenues will rise at 14 per cent annually and the shortfall in tax collection of the states will be compensated by the central government for the first five years of roll out of GST. Since this is the third year, the shortfall will be compensated, so state government does not have to worry as of now, said the official.