GST, VAT collection dips as 6 states' tax revenue till November FY20 falls

States like Andhra Pradesh, Gujarat, Maharashtra, Punjab, Manipur, and Uttarakhand saw fall in their overall tax receipts during the first eight months of the current fiscal year, compared to the corresponding period of the previous year.   

On the other hand, tax revenues rose 13.44 per cent for West Bengal in this period.  

The bulk of states’ revenue comes from the devolution from the Centre’s divisible tax pool, goods and services tax (GST), value-added tax (VAT) on petroleum, and excise duty on alcohol.

These revenues declined by 11.4 per cent in this period in Andhra Pradesh, while Punjab witnessed 10.4 per cent contraction. 

Figures for these two states are also available till December. If these are taken into account, Kerala saw some reduction in the rate of fall at 10.9 per cent. However, Punjab witnessed an increase, as its tax revenues saw 11.7 per cent decrease.  

Among other states, Manipur, too, had 11.4 per cent fall in tax revenue during April-November 2019. 

There was 3.11 per cent southward movement in these revenues in Gujarat, while another industrial state — Maharashtra — had 0.3 per cent fall in the first eight months of 2019-20 (FY20). 

However, Maharashtra saw a rise in December, making its tax receipts increase by 2.87 per cent in the first nine months of the current fiscal year. 

Uttarakhand witnessed 0.35 per cent decline in tax receipts during April-November of FY20. 

M S Mani, partner at Deloitte India, said, “States are expected to increase compliance and detect evasion in order to ramp up GST collection. In addition, they would also focus on increasing VAT revenue from the sale of petroleum products and alcoholic beverages.” The impact of shrinkage in tax revenue in these states impacted their fiscal deficit numbers. The deficit in Andhra Pradesh was 83.4 per cent of Budget Estimates (BE) by December in the current financial year. 

Similarly, Punjab saw a deficit at 42.4 per cent in the first nine months of FY20.  Fiscal deficit in Gujarat, however, stood at 27.5 per cent of BE in the first eight months of the current fiscal year. Similarly, Maharashtra had its fiscal deficit at 7.37 per cent of BE in the first nine months of the year.

Figures for Uttarakhand’s fiscal deficit were not available. In the case of Manipur, however, the deficit stood at 31.39 per cent of BE during April-November of the year. 

West Bengal’s fiscal deficit stood at 43.7 per cent of BE in the first eight months of the year.