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Rediff.com  » Business » State GST collections are more than Centre's

State GST collections are more than Centre's

November 12, 2018 16:37 IST

The shortfall in the Centre's GST collections has raised concerns over it meeting the fiscal deficit target of 3.3 per cent of GDP, reports Ishan Bakshi.

Illustration: Dominic Xavier/Rediff.com

Goods and services tax (GST) collections crossed the Rs 1-trillion mark for the second time in 2018-19.

 

As seen in Chart 1, collections rose to Rs 1.01 trillion in October, up from Rs 944 billion in September.

Collections had previously touched Rs 1.04 trillion in April.

The disaggregated data shows that Central GST (CGST) collections continue to remain well below state GST (SGST) collections (Chart 2).

One possible explanation is that credit allowed for capital goods under the previous indirect tax regime could still be weighing down CGST collections.

On the states' side, while the shortfall in collections has declined, it continues to remain high in some states such as Punjab, Himachal Pradesh and Uttarakhand.

However, as seen in Chart 3, there does not appear to be a conclusive trend across rich and poor states.

Bihar and Karnataka have similar levels of revenue shortfall despite being at different levels of development.

On its part, the government had hoped that the introduction of the e-way bill would help improve compliance.

However, as seen in Chart 4, the data on integrated GST (IGST) domestic collections does not show a sustained increase in collections post the rollout of the e-way bill.

The shortfall in the Centre's GST collections has raised concerns over it meeting the fiscal deficit target of 3.3 per cent of GDP.

As seen in Chart 5, the Centre has mopped up Rs 2.6 trillion in the first seven months of the financial year, leaving it with only five more months to meet the budgeted target (Chart 6).

 

The Centre could benefit from the division of the unallocated portion of the GST compensation cess.

So far Rs 560 billion has been mopped up through the compensation cess (Chart 7).

But it's difficult to estimate the Centre's gain as states have differed in their reporting of GST revenues, as noted by the Reserve Bank of India in its study on state budgets (Chart 8).

Ishan Bakshi in New Delhi
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