Uttar Pradesh sees 15% hike in tax kitty under GST

Consumer-centric UP, a major importer from other states, is likely to be net tax gainer post rollout

Even as the Centre gears up to implement the Goods and Services Tax (GST) from July 1, Uttar Pradesh has projected an expansion of about 15 per cent in its tax kitty under the new tax regime.

Since UP is primarily a consumer-centric state with a majority of goods being imported from peers, it is projected to be a net tax gainer following the roll out of the destination-based GST regime.

“We expect our tax collections to increase by 15 per cent under GST,” told R K Tiwari, the state's additional chief secretary and principal secretary (entertainment and commercial tax), to Business Standard last evening.

During the financial year 2016-17, the commercial tax collection in the state stood at around Rs 57,000 crore. A 15% increase in tax revenue translates into additional mop up of over Rs 8,500 crore. This way, the state's commercial tax kitty would burgeon to over Rs 65,000 crore, allowing some headroom to the Yogi Adityanath government to meet additional expenses over fulfilling its pre-poll promises.

“Effective tax rates on a majority of consumer items, especially those used in poor and middle-class households, have come down leading to a trickle-down in net tax collection. However, we are confident that our total collection would rise owing to better tax administration and the weeding out of tax evasions under GST,” he claimed.

GST has been touted as the biggest overhaul of the country’s taxation structure since Independence by following the principle of one nation, one tax. All the existing taxes would get subsumed under GST, which also found a mention in the White House address of US President Donald Trump during Prime Minister Narendra Modi's recent visit in the country.

Trump had said, “In just two weeks, you (Modi) will begin to implement the largest tax overhaul in your country's history.”

On May 16, the state assembly had unanimously passed the UP GST Bill 2017, a day after it was tabled in the legislature by Chief Minister Yogi Adityanath. In fact, the previous assembly session was convened for this very purpose by the Yogi dispensation. Next month, the state assembly would meet again during the state's Budget session.

Under GST, any shortfall in tax revenue would be compensated by the Centre for the next five years, Tiwari added. However, petroleum and alcohol products are not covered under GST.

Even under the existing Value Added Tax (VAT) structure, UP had witnessed its tax kitty inflate after the roll-out of the system on January 1, 2008. The state, which was then ruled by BSP supremo Mayawati, was among the last states to accede to VAT.

In anticipation of GST, the tax department has been holding consultative meetings with the stakeholders, including traders, over the past few months. It has also been organising training programmes for field tax officials.