After Covid lull, Delhi tax collections pick up in 1st two quarters

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The Delhi government has collected 9,560.52 crore in goods and services tax (GST) in the first two quarters of financial year 2021-22, compared to 5,712 crore for the corresponding period the previous fiscal an indication that trade and commercial activities are recovering in the national capital after remaining in a state of limbo due to the Covid-19 pandemic.

Similarly, government data showed that the government collected 2,546.18 crore in value added tax (VAT) in the first two quarters of the current fiscal, against 1,532 crore collected between April and September in 2020-21.

It is important to note that the collection of indirect taxes such as GST and VAT in a particular month essentially provides a reflection of the scale of trade and commerce activities in the month preceding it. Indirect taxes are those in which the tax burden is on the ultimate consumer of a product on which the tax is levied. While VAT is levied on automobile fuel and liquor, GST is levied on almost all products and services, ranging from groceries and medicines to garments and electronics.

A closer look into the monthly collection figures of VAT and GST this financial year shows a direct correlation with the Covid-19 situation.

According to government records that HT has seen, Delhi collected VAT of 417.01 crore and GST of 2,325.64 crorein April. In the month of April, the capital also witnessed its Covid-19 peak, which left the health-care system overwhelmed and forced the government to impose a lockdown from April 19. Therefore, in May, the VAT collection dropped to 358.17 croreand GST to  991.05 crore.

For the whole month of May, Delhi was under lockdown, which reflected in the VAT and GST collections of June, with the tax figures further dropping to 207.35 crore and 968.4 crore, respectively.

The government started implementing a phased relaxation of lockdown curbs from May 31 and markets in the city were allowed to open at 50% capacity from the first week of June and at full capacity from mid-June, even though working hours were truncated.

These relaxations are reflected in the collections for July, which show a sharp rise. In July, the government collected VAT of around 440 croreand GST of 1,584.75 crore.

Government records showed that the numbers have been going up steadily since then. In August, the government collectively recorded VAT and GST of 2,271.56 crore and in September, it further went up to 2,542.74 crore.

“The numbers show clear signs of economic recovery. In Delhi, we have implemented a data-based enforcement system and a mechanism for internal assessment of finance through key performance indicators. These efforts have contributed to higher filing of tax returns and we also plugged gaps in the system,” said Ankur Garg, commissioner of trade and taxes department, Delhi government.

For 2021-22, the Delhi budget tax revenue is 43,000 crore of which around 30,000 crore is supposed to come from GST and VAT. In 2020-21, Delhi’s budget GST and VAT collection was 30,000 crore but, during revision, it was later slashed by around 41% in light of the pandemic.

In the first two quarters of 2019-20, Delhi’s VAT collection was 2,507 crore and GST was 9,150 crore, data showed.

Between April 2020 and now, Delhi has witnessed four distinct waves of Covid-19, with the worst one in April 2021 which peaked at a weekly average of around 25,000 new cases a day and a daily positivity rate that often exceeded 30%.

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