Good news for government in Delhi, tax revenues set to jump 39% under GST

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While it is expected that the transition to the goods and services tax (GST) regime could be marked by some volatility in revenue inflows of central and state governments, there is good news for the NCR government.

The Delhi government’s tax revenue would have been 39% higher than achieved in 2015-16 if GST was in place, according to a study by the Institute of Chartered Accountants of India (ICAI).

In 2015-16, the Delhi government managed to collect net tax revenue of R17,369 crore. The report pegs the amount would have been R24,110 crore under GST.

Unlike full-fledged states, Delhi is not entitled to a share of the Centre’s tax revenue as the NCR has a special constitutional status.

The ICAI study, which was commissioned by Delhi’s department of trade and taxes, estimated that the city-state would lose half of its current revenue from taxes on goods to be subsumed in GST. The revenue from these were R11,812 crore in 2015-16 and had GST been in place, it would have been just R5,712 crore. However, this loss would have been more than made up by taxes collected from services which would have come in at R13,511 crore in 2015-16 compared to a meagre R661 crore collected.

Although the production and consumption patterns vary from state to state and the tax revenue implications of GST also would accordingly vary, the report provides clues on the trajectory of tax
The study suggests that Delhi’s revenue would decline from current levels on trade of goods irrespective of the place of manufacturing and consumption. It is believed that consumption states would benefit hugely from GST whereas “manufacturing states” could lose out. In Delhi’s case, the decline in revenue from goods locally manufactured but consumed in other states would be a steep 47%

Read more at: http://www.financialexpress.com/economy/good-news-for-arvind-kejriwal-led-aap-government-in-delhi-tax-revenues-set-to-jump-39-under-gst/561600/

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