The overall shortfall in revenue from GST in 31 States and Union Territories fell to 10 per cent over the first eight months of the current fiscal. However, the situation is still bad in Tamil Nadu and three other States where shortfall is protected.
The revenue of those States is protected at the level of 14 per cent over the base year (2015-16) tax collection. The shortfall is compensated by the Centre. A legislation-backed mechanism prescribes 100 per cent compensation for the first five years after the introduction of GST. The aim is to neutralise the State deficit within these five years. Overall, 25 States and Union Territories still have a shortfall, ranging from 1 per cent (Telangana) to 43 per cent (Puducherry).
According to data compiled for the 31st meeting of the GST Council, held here on Saturday, the overall shortfall during April-November FY-19 halved from the 20 per cent recorded in August-March FY-18. This was possibly from an improvement in the revenue position in States such as Andhra Pradesh, Bihar, West Bengal and the north-eastern States. Most of these are ‘consuming’ States.
Industrial States down
However, industrial States such as Gujarat, Tamil Nadu, Maharashtra and Punjab are not doing well. In fact, the revenue shortfall went up in Tamil Nadu, Maharashtra, Delhi and Goa, while Punjab still has a very high revenue shortfall and there is no change in Gujarat’s shortfall. Delhi, being a trading State, saw its revenue shortfall treble from August-March FY-18 to April-November FY-19.
GoM to study situation
The target is stiff, said Finance Minister Arun Jaitley. “With the base year of 2015-16 and an increase of 14 per cent compounded, the revenue should be 50 per cent more than the base year,” he said. Now, a Group of Ministers (GoM) will study the revenue position in various States. It will take expert assistance from the National Institute of Public Finance and Policy and, based on the limited data, it will come out with broad indications.
Meanwhile, the indication is that compensation for the full year is likely to be less than that for the eight months of last fiscal. It was ₹48,000 crore for August-March FY-18, and ₹30,000 crore for April-September FY-19. For all of FY-19, it could be ₹60,000 crore.