The lockdown, imposed throughout the country to contain the spread of COVID-19, has caused about a 50% fall in the State’s Own Tax Revenue (SOTR) of Tamil Nadu during the first quarter (April-June) of this financial year, compared with the figure for the corresponding period last year.
This year’s SOTR collections during April-June amounted to ₹12,318.18 crore against the previous year’s figure of ₹25,082.52 crore. The extent of loss is around 63% if one is to go by the State government’s estimates, which were prepared prior to the outbreak of the COVID-19 pandemic. As per the estimates, the SOTR collections for the entire 2020-21 are ₹1,33,530.3 crore. The figure for a quarter will be about ₹33,383 crore.
Notwithstanding the severe drop in the revenue collections, what has provided a glimmer of hope to managers of the State finances is the performance in the collections in June as against April and May. In fact, the revenue through the State Excise — an index of the sale of liquor — was higher in June 2020 than what it was a year ago, let alone the collections in May 2020.
Tax on liquor
Apart from the opening of retail outlets of the Tamil Nadu State Marketing Corporation (Tasmac), the restructuring of tax on liquor has contributed to the hike. In June this year, the collections were ₹724.3 crore, whereas the figures for June 2019 and May 2020 were ₹588.47 crore and ₹324.83 crore respectively.
As for the components of Stamps and Registration — an indicator of real estate activity — and Motor Vehicle (MV) Tax, the revenue collections last month doubled those of May 2020. There is an expectation among officials that the MV Tax may net more revenue in the coming months than in the past in the event of improvement in the sale of two-wheelers on account of the restrictions on public transport.
This time, one more aspect has provided breather to the government. The Centre provided around ₹4,600 crore in two instalments during April-June towards the Goods and Service Tax (GST) compensation. This amount was for the period of October 2019-February 2020, an official of the Finance Department pointed out.
