In form of GST collection Recently making new records, a report of India Ratings and Research said the average growth rate of State GST (SGST) at 6.7 per cent during FY2018-FY 2011 has been lower than the 9.8 per cent growth recorded by the taxes included under it. GST During FY14-FY17.
“The share of State GST (SGST) in its own tax revenue (SOTR) during FY2018-FY2011 was 55.4 per cent as compared to 55.2 per cent during FY2014-FY 2017, indicating that the share of SOTR There has been an increase in both SGST and non-SGST components. has been broadly similar. This means that there was no incremental benefit to SOTR from the implementation of GST,” India Ratings said in the report.
It said that till the implementation of GST, in addition to collecting VAT (sales tax) on sales within the states, the producing/exporting states used to collect Central Sales Tax (CST) up to 2 per cent on inter-state sales. The states where CST was contributing more than 4.5 per cent to their SOTR during the financial year 2012-2017 were Assam, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, Jharkhand, Meghalaya, Odisha, Sikkim and Tamil Nadu – Producers and Consumers A mixture of both the states. After the implementation of GST, the ratio of CST to SOTR came down to 0.95 per cent in FY 2011 (RE) from 4.16 per cent in FY 2017.
The growth of SGST during FY2018-FY 2011 averaged 6.7 per cent, which is lower than the growth of 9.8 per cent recorded by the taxes subsumed under GST during FY2014-FY 2017.
India Ratings said that since GST is a destination-based tax, goods/services are taxed at the place where they are consumed and not at the place of origin or where they are produced. “Even the Integrated GST (IGST) collected by the Center is shared with the state where the respective goods or services are sold and not where they are produced. Hence, better performance of consumer states was expected after the implementation of GST.
Therefore, it said, GST compensation has become such an important source of revenue for the states that without it the GST revenue growth of most states would not reach 14 per cent. This is the reason why many states are not ready to accept this shutdown till June 2022 and are demanding extension.
The GST compensation, which is given to states for shortfall in their revenue, was released by the central government to states in FY18, amounting to Rs 49,000 crore. This increased to Rs 83,000 crore in FY19, Rs 1.65 lakh crore in FY20, Rs 2.78 lakh crore in FY21 and Rs 2.39 lakh crore in FY22.
The central government borrowed Rs 1.1 lakh crore in FY 2011 and Rs 1.59 lakh crore in FY 2012 to provide compensation to states and passed them on as loans on a back-to-back basis. Till April 27, compensation of Rs 78,704 crore was pending for FY22, which is equivalent to four months’ compensation.
GST collections hit an all-time high of Rs 1,67,540 crore in April on the back of better compliance and faster economic recovery. This is Rs 25,000 crore more than the previous highest collection of Rs 1,42,095 crore recorded in March. “Gross GST revenue for the month of April, 2022 is Rs 1,67,540 crore, of which CGST is Rs 33,159 crore, SGST Rs 41,793 crore, IGST Rs 81,939 crore (including Rs 36,705 crore collected on import of goods). The cess is Rs 10,649 crore (including Rs 857 crore collected on import of goods),” an official statement had said.
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