Two months of lockdown, in the wake of the Covid-19 pandemic, has cost the Chandigarh administration a whopping ₹342 crore in tax collections. The revenue generation from goods and service tax (GST), excise and value added tax (VAT) has plummeted by 71% for April and May in comparison to the same period last year.
Also hit hard by the lockdown, the municipal corporation, which is already struggling with financial crunch, has cut its projected revenue for 2020-21 by 20%. The lockdown was imposed in the city on March 22, with strict restrictions on the movement of people and goods. Subsequently, restrictions were eased in phases, allowing some commercial activity, but it was only under Unlock 1, which started on June 1, that business and industrial units were allowed to open.
“In addition to major taxes, the administration has also lost revenue from non registration of properties and other fees and charges collected by public-dealing offices, such as the registration and licensing authority and the estate office,” said a senior UT official. All these offices were closed for more than two months.
GST COLLECTION WORST-HIT
Of the three major receipts of the UT, GST registered a decline of 75% for first two months of the current financial year in comparison for the same period last year. Last year, the collections were ₹230.5 crore, while this year they are ₹57 crore. GST is collected on goods and services except fuel (petrol and diesel) and liquor. Excise collections (mainly from liquor sales) fell by 69% from ₹160 crore last April-May to ₹50 crore for the same period. The revenue from VAT fell to ₹28 crore this year from ₹87 crore last year, a decline of 68%.
Ajoy Kumar Sinha, UT finance secretary, said: “The revenue slump is for first two months of the financial year, when all commercial activities were closed. Now, with the business activity picking up, we expect recovery in tax collections. The final June tax collection report, to be out by next month, will show the scale of recovery that has set in.”
Developmental works to be carried out by the administration will not to be affected because of revenue fall, he said. The UT in May increased the VAT on petrol and diesel, and also increased excise on liquor sales to augment its revenue. Significantly, the central government has directed a cut by 20% in spending for the fist quarter for the current financial year.
MC IN DIRE FINANCIAL STRAITS
On June 29, MC officials will be presenting revised projections of its revenue receipts for 2020-2021 before the General House. The civic body is expecting to earn around ₹80 crore less than the budget estimates. A major shortfall of around ₹50 crore is expected in water collection. Revenue from community centre bookings is also expected to down by ₹4 crore.
“The MC will not carry out any additional development, except for the works for which the money has been earmarked and allotted by the UT already. Even then, the MC might find it difficult to pay salaries to its employees,” said KK Yadav, MC commissioner. The MC has a budget of ₹1,472 crore against revenue estimates of ₹661 crore (which includes ₹340 crore as the UT’s grant-in-aid).