With less than a month left for the nationwide rollout of the Goods and Services Tax (GST), Karnataka will forgo nearly a dozen of the existing taxes — totalling revenue of around ₹50,000 crore a year — as they will be subsumed by the GST.
The GST would subsume the State value-added tax, Central sales tax, luxury tax, entry tax (all forms), entertainment and amusement tax (except when levied by local bodies), tax on advertisements, purchase tax, taxes on lotteries, betting and gambling, State surcharges and cess, as they pertain to supply of goods and services.
The VAT (₹36,000 crore per anum) brings in the highest share to the revenue basket of the State.
The Finance Department has not yet estimated the exact revenue loss or gain to the State as the GST Council has not completed the exercise of fixing tax rates on various commodities.
“The amount of loss or gain will be known only after introduction of the GST regime,” sources in the Commercial Tax Department told The Hindu . Sources said that the State would gain due to higher compliance levels and widening of the tax base.
However, officials in the Finance Department feel implementation of various development projects may get adversely affected in the event the Centre delays payment of compensation for the State under the GST regime.
Outside GST
Only a few taxes will continue to remain out of the GST. They are professional tax (₹900 crore), State excise (₹18,050 crore), motor vehicles (₹6006 crore), stamps and registration (₹9,000 crore).
GST will apply to all goods, other than alcohol and five petroleum products — petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel.
Taxes on entertainment and amusement to the extent levied and collected by urban and local bodies or a regional council will not be subsumed under GST.
Businesses in the State are the most prepared to shift to the new indirect tax system, with a maximum number of 93.27% of the more than 5.50 lakh taxpayers already enrolling for GST.
Many States, including West Bengal and Jammu and Kashmir, are not prepared for rollout of the new tax regime.
Legislature session
The Legislature session, which commences on June 5, will discuss the new tax regime, particularly taxes levied by States to be called State GST (SGST).
Central GST and SGST will be levied at rates recommended by the GST Council. The State legislature has to make a law with respect to SGST.
Taxes subsumed under GST
[Tax | Revenue per annum]
* VAT - ₹36,000 crore
* Sales tax - ₹10,346 crore
* Entry tax - ₹3,304 crore
* Central sales tax - ₹2,278 crore
* Luxury tax - ₹428 crore
* Entertainment tax - ₹304 crore
* Betting tax - ₹181 crore
