Telangana, which had seen about 10% dip in its average monthly revenue post demonetisation, is not yet sure how its revenue will pan out in the coming months.
The revenue shortfall for 2016-17 is now estimated to be around ₹1,500 crore to ₹1,600 crore, much better than the initial estimates of around ₹3,000 crore.
With a lot of expectations from the Union Budget by the general public as well as States, official sources said the talk of stimulus to economy in the form of government expenditure on infrastructure projects was certainly gaining ground.
Tax base
Another possibility is of widening of tax base in the State as well as across the country with trade and general public shifting to cashless transactions post high denomination note ban, which improves transparency in the trade volumes and business turnover.
The cashless transactions did jump in the last two months. But, there are also concerns if the trend will continue with limits on cash withdrawals gradually easing up, sources point out. “Sooner the Government incentivises cashless transactions, better it will be for the tax revenues,” they add.
State share
The States expect a share in the ₹25,000 crore tax collection the Centre would get from the first instalment of Income Declaration Scheme. “We may get our share before the March-end,” a senior official said.
“We are hopeful that from the second half of next financial year, there will be increase in the tax base. It should compensate for the loss of revenue from Stamps and Registration, motor vehicle tax following hit taken by the real estate and transport sectors after the demonetisation,” official sources said.
Fall in revenue
The Stamps and Registration revenue fell by about 35% from ₹300 crore to ₹200 crore and 15% decline was noticed in sale of two-wheeler and four-wheelers. The Value Added Tax was a mixed bag. Some commodities other than those related to real estate like steel, cement, paints were doing reasonably well from December onwards. There was no major impact on revenue from liquor too so far but the Supreme Court directive banning liquor shops within 500 meters from high ways would be a dampener for the excise revenue.
GST from June
Goods and Services Tax is another major tax reform coming into effect from June but with Centre agreeing to consider States’ demands, that should not be a bother, sources said.
