Post GST revenue dip casts shadow over CM’s plans to present Rs 2L cr budget

Bengaluru: A sharp dip in the state’s revenues under the GST regime has cast a shadow over chief minister Siddaramaiah’s plans to present a massive sop-filled Rs 2.10 lakh crore budget for 2018-19 on February 9.

In the three months before the GST rollout on July 1, the commercial tax department had collected Rs 14,244 crore value added tax (VAT). Tax collections during the five months after the GST rollout has been put at Rs 15,213 crore.

“That the amount of tax collected in five months of GST regime is just about equal to that of the three-month collection during the earlier VAT regime is a clear indication of the declining trend. It is due to low compliance, thanks to technical glitches in the system and reduction of tax rates,” said B T Manohar, member of the GST advisory committee of government of Karnataka.

Incidentally, Siddaramaiah’s record 14th state budget will be the first under the new tax regime and also the present government’s last. With his last budget estimating the total expenditure at Rs 1.86 lakh crore, his keenness to touch the Rs 2 lakh crore mark is obviously intended at scoring brownie points ahead of the assembly elections.

“GST has clearly impacted the revenue collections and the shortfall is a little more than expected. However, with the Centre compensating for the loss, we’re hopeful of being well within the comfortable zone,” said I S N Prasad, additional chief secretary (finance).

The revenue coming to the state government under the GST regime is the sum of the state’s share of GST (SGST) and the tax collected on inter-state transactions (IGST), but it has never matched with the monthly collection during the earlier VAT regime. In the VAT regime, a month’s collection used to be around Rs 5,000 crore, while the highest monthly collection under the GST regime has been Rs 3,185 crore.

There has also been a shortfall in the state’s revenue from the sale of petrol and diesel, which have been kept out of GST. As against the targeted Rs 10,000 crore till November 30, the commercial tax department collected Rs 9,000 crore. The average monthly shortfall of Rs 200 crore has been attributed to abolition of 10% entry tax on fuel, post GST rollout.

Left with only three months to go before the fiscal year ends, tax officials are faced with an uphill task of achieving the targeted Rs 55,000 crore, when the revenue mop in the nine preceding months is just close to the half-way mark.

“Pressure due to low tax compliance notwithstanding, we hope to reach the target. We’re betting on the growth expected in the last quarter and the technical glitches too have been rectified by and large,” said Srikar M S, commissioner of commercial taxes department.

Experts though say the planned jump in the budget outlay from Rs 1.86 lakh to Rs 2.10 lakh is normal as it is in consonance with the average 15% growth.

“The only issue is that the GST collection is coming down and the government will have to make it up with other sources of revenue, including state excise which are doing fairly good,” said K Gayatri, economic professor at Institute for Social and Economic Change (ISEC).


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