In the first two months following the rollout of the Goods and Services Tax (GST), the revenue collected in Karnataka fell well short of expectations. The State is looking to the Centre to make up for the shortfall.
The ‘Mid-year Review of State Finances’, tabled in the Legislative Assembly on Friday, shows that ₹5,710 crore was collected as revenue in July and August this year — the first two months of implementation of GST — as against ₹6,190 crore during the same period in 2016-17.
As per the Compensation Act, the actual revenue level for compensation (with a 14% growth per year over the revenue collected in 2015-16) is ₹6,640 crore, the review notes. This would mean the State has to get a compensation of ₹930 crore for just those two months.
The Fiscal Management Review Committee, headed by the Chief Secretary, which reviewed the fiscal and debt position of the State in November, has advised the Finance Department to closely study the shortfall impact in order to follow up with the Centre to get full compensation.
The review also pointed out that an amount of ₹1,500 crore was borrowed in the last week of September owing to the uncertainty over revenue collection under the GST regime.
In July and August, over ₹4,000 crore was collected as State GST, there was a net settlement of ₹1,470 crore from the Integrated GST Account, and Value Added Tax and other subsumed taxes added up to ₹140 crore towards the period before the introduction of GST.
Commercial taxes
The growth of commercial tax collection slumped to 8% in the first half of 2017-18, down from 13.3% in the corresponding period in 2016-17. However, 49% of budgetary estimates were collected in the first half of 2017-18, as against 48% in the corresponding period in 2016-17.
The State excise collection touched 47% of the budgetary estimates, as against 49% during the corresponding period in 2016-17, while the motor vehicl es tax collection hit 48% of the estimates, as against 50% during the previous year.
