VAT collections see healthy Q1 growth

Tax revenues in the 30 states under the value-added tax (VAT) regime appear to be stabilising with most states posting double digit growth. Gross tax collections during the first quarter this fiscal increased by 26.5 per cent to Rs 26,641 crore, compared with Rs 21,060 crore during April-June 2005-06.

Gujarat, Rajasthan, Madhya Pradesh, Jharkhand, Uttaranchal and Chhattisgarh, which joined the VAT regime on April 1 this year, have registered growth of over 20 per cent in their tax collections in the first quarter, according to the latest data of the empowered committee of state finance ministers on VAT.

Tax collections of Gujarat increased by over 23 per cent during April-June to Rs 2,734 crore, against Rs 2,219 crore in the corresponding period last year.

Madhya Pradesh's tax revenue increased by 26 per cent to Rs 857 crore, compared with Rs 682 crore during April-June 2005-06. Tax collections in Rajasthan increased by 24 per cent in the first three months to Rs 1,432 crore, against Rs 1,153 crore in the same period a year ago.

States like Bihar, Karnataka, Maharashtra and West Bengal, which in the last fiscal had sought cash compensation for revenue losses under VAT, also posted healthy growth in the first quarter. Collections in Bihar increased by 43.5 per cent to Rs 397 crore, compared with Rs 277 crore in April-June 2005-06.

Maharashtra saw a 31 per cent jump in collections to Rs 5,463 crore from Rs 4,167 crore in 2005-06. Karnataka posted 15 per cent growth to Rs 2,346 crore, while West Bengal witnessed a 16.5 per cent increase in its tax revenue to Rs 1,177 crore against Rs 1,010 crore during the first quarter in 2005-06.

A functionary of the empowered committee said the increase in tax collections was reflective of improved tax compliance under VAT. The committee is now focusing on issuance of cash memos by traders.

Last year, the committee did not act tough since it wanted the VAT regime to stabilise, the official said. The highest growth in collections was visible in Union Territories.