States Set To Gain Rs 37,426 Crore Because Of Increased Revenue From Oil And GST: SBI Research

Indian states are all set to gain an additional Rs 37,426 crore thanks to increased revenue from oil and implementation of Goods and Services Tax (GST), says the latest Ecowrap report published by SBI research.

In its previous report, SBI research had reported that states gained Rs 18,728 crore due to hike in crude oil prices and if Value Added Tax (VAT) was imposed on base price and not on prices inclusive of Centre’s tax, then diesel prices could further be reduced by Rs 3.75 per litre and petrol prices by Rs 5.75 per litre. But then states would’ve to forego Rs 34,627 crores of tax revenue, meaning a total loss of Rs 15,899 crore to their exchequer.

But if the increased collections from introduction of GST are to be taken into consideration, then states can cut oil prices and still be in positive. SBI report has analysed budget documents of 24 States out of which 16 States have reported that their tax revenue increased by more than 14 per cent (mutually accepted minimum tax growth rate below which states have to be compensated) in Fiscal Year 2018 compared to last year’s collection.

According to the Ecowrap report, on an aggregate, states have gained by Rs 18,698 crore in revenue in FY18. The states which have gained maximum due to GST are Gujarat, Haryana, Maharashtra, Chhattisgarh, Jharkhand and Punjab among others. Karnataka, West Bengal, Uttar Pradesh, Madhya Pradesh and Assam have reported only mid increase or even decrease in collection.