States see 50% reduction in GST shortfall

NEW DELHI: States have seen the “shortfall” in the “GST collection target” halve to 10% during the first eight months of the current financial year with the north-eastern states reporting sharp improvement, while Goa, Delhi, Maharashtra and Tamil Nadu saw a deterioration.

The Centre has promised that it will compensate states if their annual revenue growth is under 14%.

Data shared with the states on Saturday showed that half-a-dozen states had reported “surpluses”, with Mizoram, Arunachal Pradesh and Manipur leading the pack. In contrast, Goa, Delhi, Maharashtra and Tamil Nadu, which were behind the curve, have seen a spike in the “shortfall”. In contrast, Bihar, Meghalaya and Madhya Pradesh are among the lot that have managed to significantly bridge the gap compared to July-March 2018, the period in which GST was applicable last year.

Among the laggards were Puducherry, Himachal Pradesh and Uttarakhand, which will get the maximum compensation from the Centre as their collections are nowhere near the 14% growth target.

After a meeting of the GST Council on Saturday, finance minister Arun Jaitley had told reporters that the overall compensation was expected to be lower this year as most states were showing improvement.

He suggested that there were different reasons for the shortfall, which is calculated on the basis of revenue in 2015-16, with a 14% growth budgeted for annually. In case of Bihar, for instance, the state government had opted to increase VAT rates in the base year to cover for revenue loss due to prohibition.

Similarly, the Centre will have to compensate Punjab for “revenue loss” due to scrapping of purchase tax and infrastructure cess that was levied before they were subsumed into GST. In case of Uttarakhand, FM said, integrated GST collections had been lower since the new regime kicked in, which could also be the case with Himachal, another hill state.

Among the sectors, telecom, aviation, real estate and small service providers were seen to be slowing down collections. Monthly GST collections have hovered around Rs 96,000 crore, higher than last year’s Rs 89,000 crore but lower than the required rate of Rs 1.04 lakh crore.