Poorer states leave industrialised peers behind in GST collection rates: Report

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Heartland states such as Bihar, Uttar Pradesh, Madhya Pradesh and Odisha showed improved performance in goods and services tax (GST) collection for 2019, as compared to the previous year, reports the Times of India.

Their performance stood out against that of industrialised states, with only West Bengal bucking the trend, the report said.

Delhi, with a 2 per cent drop, reported the worst collection of Rs 12,700 crore for April-July 2019, compared to Rs 13,000 crore a year back, it said, adding that the overall GST collection for the period rose by 9 per cent to Rs 3.56 lakh crore.

The top performers in terms of collection rates were Nagaland (39 per cent), Arunachal Pradesh (35 per cent) and Sikkim (32 per cent). Their GST collection volumes, along with Meghalaya, were between Rs 370 crore and Rs 680 crore, the report said.

Odisha saw collection rate spike by 20 per cent to Rs 9,264 crore for April-July 2019 from Rs 7,666 in April-July 2018, Uttarakhand by 19.9 per cent (Rs 3,676 from Rs 3,067); Bihar by 17.8 per cent (Rs 11,625 – Rs 9,869) and Madhya Pradesh by 14.6 per cent from Rs 14,024 to Rs 12,240.

Assam recorded a 14.1 per cent rise (Rs 6,197 – Rs 5,433), Uttar Pradesh (12 per cent from Rs 34,783 to Rs 31,056), Karnataka 10.7 per cent (Rs 29,789 – Rs 26,908), Tamil Nadu – 10 per cent (Rs 27,959 – Rs 25,425), Andhra Pradesh – 9.1 per cent (Rs 14,482 – Rs 13,271), and Telangana – 8.7 per cent (Rs 16,121 – Rs 14,832).

Maharashtra rose by 7.2 per cent (Rs 54,208 – Rs 50,557), West Bengal 6.4 per cent (Rs 19,014 – Rs 17,862), Gujarat 6.2 per cent (Rs 24,663 – Rs 23,221) and Kerala 4.7 per cent (Rs 14,542 – Rs 13,888).

MS Mani, a partner at consulting firm Deloitte, told the paper that the above-average collections in consuming states were “expected even prior to GST launch as it is structured as a destination-based consumption tax”.

“However, originating states, where the collection growth has been slower, would need to consider the fact that the compensation mechanism comes to an end in 2022, unless extended,” he said.

Anticipating this development, Gujarat, Maharashtra and Tamil Nadu had demanded that the Modi-led government begin negotiations for implementing GST – demands that the BJP-rules states later dropped.

As per stipulations, states with less than 14 per cent annual growth would be compensated by the Centre for five years. However, some of these states – going by the GST numbers – would not require the support, the paper pointed out. The compensation is paid out of cess imposed on soft drinks, tobacco and automobiles among others.

Experts told that paper that the development has been good for poorer states and would augur well for states with high production and consumption base as well, such as Maharashtra.

However, states with lower populations such as Haryana and Punjab could be adversely affected as the various taxes subsumed into GST would affect their monies.