‘Gabbar Singh Tax’? Truth Is States’ Revenue Shortfall Under GST Regime Has Been Continuously Falling In 2018

The deficit in state revenues from the Goods and Services Tax (GST) is declining, shows data shared with states, Business Standard has reported. The average monthly shortfall in state GST and IGST had fallen from 28.3 per cent of the monthly targeted in August 2017 to 23.7 per cent in February. The average monthly shortfall in GST collection has been 13 per cent for the period August 2017 to June 2017.

As per Business Standard analysis, GST collections up to June 2018, states on an average, faced a monthly average gap of Rs 5,986 crore. This gap amounted to a monthly shortage of 13 per cent over the average monthly target of Rs 44,620 crore. The shortfall will be met through the compensation cess.

States with the highest deficit in percentage terms from August 2017 to June 2018 were Puducherry (43 per cent), Himachal Pradesh (39 per cent), Uttarakhand (37 per cent), Punjab (36 per cent) and Jammu & Kashmir (33 per cent). In absolute revenue terms, Karnataka (Rs 829 crore) and Punjab (Rs 580 crore) fared the worst.

The target was computed by the National Institute of Public Finance and Policy (NIPFP). The revenue targets decided by NIPFP are the amount of taxes that must flow to each state under the GST regime so that the Centre will not have to pay any compensation.