Four years after GST rollout, SGST growth still slow
Four years after goods and services tax (GST) was rolled out, overall growth in collection of the state GST (SGST), continues to remain slow. Data from the state commercial tax department shows that SGST collection stood at Rs 34,561.34 crore in Gujarat in 2020-21, down by 3.75% against 2019-20, when it was Rs 35,908.64 crore. For two consecutive years, GST collection has slowed.
J P Gupta, state commercial tax commissioner, said, “SGST collection has surely slowed but overall the state’s revenue through GST has gone up with IGST settlement and GST collection. We have clocked an average of 8% growth in revenues over the past couple of years. Gujarat being a manufacturing-heavy state was at a natural loss of revenue because GST is a consumption-driven tax.”
“Moreover, compliance has continued to remain a concern as not all taxpayers are filing returns whereas some are wrongfully claiming input tax credit, which is a clear loss to the state exchequer,” Gupta added.
Sources also said that economic growth has not been as robust as expected and in a slowdown-like situation, tax collection is bound to be affected. Last year it was due to the pandemic and the year before that due to several other factors.
At the time of the GST rollout, it was announced that for the first five years after the rollout, the Centre would compensate to states if the growth in the state’s revenues through GST was less than 14%. From July 2017 till February 8, 2021, according to data from the Union finance ministry, Gujarat has claimed Rs 29,243 crore worth of GST compensation, indicating a significant deficit in the state’s revenues.
If the GST council does not extend the deadline for compensation, Gujarat will have a significant revenue loss. Sources said a loss in the state’s revenue will directly impact its spending on public welfare and infrastructure.
