Bhopal: The Central Government might be singing paeans to the GST but the fact is that the new tax regime has come as nothing short of a catastrophe for both the Central and the state governments.
The state government’s revenue income has fallen by a staggering 43 per cent. Union Revenue Secretary Hasmukh Adhia has written to the chief secretary B P Singh, describing the situation as “alarming” and asking him to go for a detailed review of the situation.
Making it clear that the state should not bank on the GST compensation to be provided by the Centre, Adhia said that the Centre was worse off than the state. The compensation for July and August has been released but as the CGST collection is even lower than SGST, the Centre cannot go on funding the states.
The Centre has sent data related to revenue earning in the first two months, post-GST implementation. The GST regime was inaugurated on July 1, 2017. The state government’s revenue fell by 43.4 per cent in July and by 42.8 per cent in August. The revenue inflow was Rs 940 crore and Rs 949 crore respectively in the two months, as against the expected Rs 1,660 crore per month.
Adhia has urged the CS to do everything possible to give a fillip to tax collections. He said that the SGST earnings should be improved. Acting on Adhia’s counsel, the chief secretary has directed the revenue-earning departments to focus on boosting income.
What may add to the problems of the state government is the fact that it will have to shell out huge amount for the Bhavantar Bhugtan Yojana. Given the precarious fiscal condition of the Centre, the state is not very hopeful that Delhi would share half of the financial burden for implementation of scheme. There is no certainty that the GST compensation to be received from the Centre would be paid in full and in time.
The state government has already reduced VAT on petrol and diesel. The decision has led to a drop of Rs 1000 crore in its annual revenue.
