MUMBAI: States are more likely to acquire an additional Rs 37,426 crore in earnings in the current fiscal at the again of surge in oil costs and better tax collection due to the GST, says a report.
According to SBI Research, the affect of GST on tax earnings is minimum except for in a couple of states.
As many as 16 of the 24 states, have noticed thier earnings expanding over and above the 14 p.c baseline/ mutually accredited minimal tax growth rate between the Centre and the states post-GST rollout underneath which the states need to be compensated.
"We have found that on an aggregate lever, the states have gained by Rs 18,698 crore in additional revenue in FY18. If we combine this figure with the gains that the states have made due to increase in crude prices, the overall figure will be Rs 37,426 crore," the report said.
The amount will probably be enough to neutralize the Rs 34,627 crore of earnings forgone if the states impose VAT most effective on base the cost of crude.
Post-GST implementation in July last 12 months, the tax earnings of the states has gone up in FY18 due to increased tax compliance and broader tax base.
While Gujarat, Haryana, Maharashtra, Chhattisgarh, Jharkhand and Punjab have won the maximum from GST, Karnataka, Bengal, UP, MP and Assam have reported a decline in tax collection post-GST.
These states had been impacted due to the adjustments in the nature of taxation as GST has subsumed oblique taxes such as provider tax, VAT, excise responsibility, entry tax, entertainment tax into one, together with the taxes underneath the Centre and the states which contribute to an mixture of over 55 according to cent of tax earnings of these states.
"We expect that while there is a need to optimise tax revenue, for funding social security programmes, there is also a need to insulate consumers from adverse price shocks," the report said.
From that perspective, states may just come forward and rationalise their VAT rates. After all, crude price falling a lot underneath USD 70 a barrel seems to be unsure now, the report concluded.
According to SBI Research, the affect of GST on tax earnings is minimum except for in a couple of states.
As many as 16 of the 24 states, have noticed thier earnings expanding over and above the 14 p.c baseline/ mutually accredited minimal tax growth rate between the Centre and the states post-GST rollout underneath which the states need to be compensated.
"We have found that on an aggregate lever, the states have gained by Rs 18,698 crore in additional revenue in FY18. If we combine this figure with the gains that the states have made due to increase in crude prices, the overall figure will be Rs 37,426 crore," the report said.
The amount will probably be enough to neutralize the Rs 34,627 crore of earnings forgone if the states impose VAT most effective on base the cost of crude.
Post-GST implementation in July last 12 months, the tax earnings of the states has gone up in FY18 due to increased tax compliance and broader tax base.
While Gujarat, Haryana, Maharashtra, Chhattisgarh, Jharkhand and Punjab have won the maximum from GST, Karnataka, Bengal, UP, MP and Assam have reported a decline in tax collection post-GST.
These states had been impacted due to the adjustments in the nature of taxation as GST has subsumed oblique taxes such as provider tax, VAT, excise responsibility, entry tax, entertainment tax into one, together with the taxes underneath the Centre and the states which contribute to an mixture of over 55 according to cent of tax earnings of these states.
"We expect that while there is a need to optimise tax revenue, for funding social security programmes, there is also a need to insulate consumers from adverse price shocks," the report said.
From that perspective, states may just come forward and rationalise their VAT rates. After all, crude price falling a lot underneath USD 70 a barrel seems to be unsure now, the report concluded.
States revenue may be up by Rs 37,400 crore in FY19
![States revenue may be up by Rs 37,400 crore in FY19]()
Reviewed by Kailash
on
June 17, 2018
Rating:
