Southern States - Tamil Nadu   

Drought threatens to hit ST collection too

By Our Special Correspondent

CHENNAI Aug 1. The dry spell across Tamil Nadu has not only upset the farming operations, but threatens to hit sales tax revenues of the cash-starved State.

Officials of the State Commercial Taxes department, who were buoyant after improved collections in the first quarter of the financial year, are now worried over the truant monsoon's impact on collection. ``If the drought continues, it will affect the purchasing power of the people. Consequently, the sales tax collections will also plummet,'' fears a senior official of the Commercial Tax department.

In the first quarter — from April to June — the collections showed a 10 per cent increase over the last fiscal. In real terms, it went up to Rs.2,350 crores from Rs. 2,140 crores. But, the rise in revenue was not due to the dramatic turnaround in the economy. It was achieved largely because of the increased tax structure in the 2002-2003 budget, which imposed fresh levies to the tune of Rs. 650 crores. Despite the drought, the Government's only hope now is that the multi-point tax structure, introduced from July 1 as a precursor to moving towards the Value Added Tax regime in April 2003, would bring in additional revenue. For, dealers having an annual sales turnover of Rs. 10 lakhs would have to pay resale tax under the new system. ``This will bring more traders under the tax net and increase revenues,'' says the official.

Also, the five per cent surcharge on infrastructure which came into force last month is expected to add to the revenues.

But, whether Tamil Nadu would achieve its targeted 10 per cent growth in sales tax would largely depend on the monsoon.

Meanwhile, the Department continues its drive to collect 10 per cent of the whopping Rs. 5,800 tax arrears, piled up over the last few decades, which are not locked in legal wrangles. The computerisation of the commercial tax offices is in full swing and 140 out of the 323 offices have been computerised, preparing them for the VAT regime.

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