A report said that the tax revenue of the states has not increased due to the implementation of GST.
Mumbai:
Domestic rating agency India Ratings on Monday said the Goods and Services Tax (GST) has not helped the states in achieving the key objective of increasing their tax revenue.
The rating agency said the data does not point to any benefit to the states in the last five years since the implementation of GST.
From June this year, the Center will stop paying any compensation to states for shortfall in tax collection. The GST compensation for a period of five years was part of the agreement between the states and the central government at the time of the roll-out of the new indirect tax regime in 2017.
Several states have asked for extension of GST compensation. However, Finance Minister Nirmala Sitharaman, while presenting the budget for FY23, has already said that the compensation period will not be extended beyond June 2022.
The rating agency said, “…the data available so far does not inspire confidence with regard to GST achieving or moving towards achieving its two major objectives, namely, that it enhances tax revenue and is beneficial to consumer states.” Is.” ,
The share of State GST (SGST) in States’ Own Tax Revenue (SOTR) as compared to 55.4 per cent during FY18-FY21 as compared to 55.2 per cent during FY2014-FY17 indicates that SOTR The growth in both SGST and non-SGST components of K has been broad-based. Similarly, it said.
“This means that there was no incremental benefit to SOTR from GST implementation. Further, the average SGST growth of 6.7 per cent during FY2018-FY2011 was 9.8 per cent recorded by taxes filed under GST during FY14. Percentage growth has been less than- FY17,” it added.
Till the implementation of GST, the producing/exporting states collected VAT (sales tax) on sales within the states and central sales tax (CST) of 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 has come down to 0.95 per cent in FY 2011 (RE) from 4.16 per cent in FY2017.”
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