Only three states — Manipur, Mizoram and Arunachal Pradesh — have reported surplus GST collections compared with the average monthly revenue they should earn to ensure that the Centre does not have to compensate them for any loss.
At the other end of the spectrum are half-a-dozen states — Puducherry, Himachal, Uttarakhand, Punjab, Jammu & Kashmir and Bihar — which have a shortfall of up to 43%. As a result, the government has ordered the chief economic adviser to assess the reasons for the massive gap, amid complaints of poor compliance, and provide an analysis.
The alarm bells started ringing based on the average revenue trends for the August 2017-June 2018 period, which have shown a 13% shortfall at the all-India level. While the average monthly revenue was estimated at Rs 44,620 crore, the actual mop-up was Rs 38,635 crore, resulting in a revenue gap of nearly Rs 6,000 crore a month, sources told TOI.
States such as Karnataka may not be at the top of the list but they have a significant gap. Karnataka — its average monthly revenue is estimated at around Rs 4,000 crore, next only to Maharashtra’s Rs 6,800 crore — has seen an average monthly deficit of close to Rs 830 crore, which is 21% of its monthly revenue.
Although those such as Uttarakhand have shown an increase in collections compared to the pre-GST period, the Centre will have to compensate some of the states for the deficit as it had promised to cover the revenue loss of states for five years, after factoring in an annual growth in collections of 14%.
Sources said states have given multiple reasons for the deficit. For instance, Puducherry has attributed it to the end in tax arbitrage as a common GST rate has prompted Tamil Nadu residents to buy from the state itself, instead of driving to the neighbouring Union territory, where levies were lower in the pre-GST era.
On their part, Bihar and Himachal have indicated that collections from services have been muted. Several states such as Uttarakhand and Assam blamed low compliance in terms of return filing for the deficit.