Madhya Pradesh recorded the highest growth in tax revenues among major States in the first quarter. The State own tax revenue (SOTR) of Madhya Pradesh grew 23 per cent year-on-year to ₹23,387 crore in the April-June quarter. Tamil Nadu recorded the lowest growth in this period at 2 per cent.
businessline analysed the SOTR of 10 large States in Q1 FY24. According to provisional figures, Uttar Pradesh recorded the second-highest growth in own tax revenues. The SOTR of the country’s most populous State grew 20 per cent year-on-year to ₹62,370 crore in Q1 FY24. UP was followed by Karnataka with 17 per cent growth, and was followed by Odhisha and Andhra Pradesh recording 16 per cent growth.
Surprisingly, industrially-rich Tamil Nadu recorded single digit or negative growth in most of the tax components. But the tax collections may improve in the subsequent quarters, as the government has hiked various tax rates in recent months. For instance, the Tamil Nadu government recently revised the stamp duty charges on property registration. From a flat fee, the stamp duty has been increased to 1 per cent of the property’s market value. The State also increased the registration charges for construction agreements to 3 per cent from 1 per cent earlier. The State also increased power tariff for commercial and high-tension connections by 2.18 per cent. These changes will be effective from July 1.
SOTR includes revenues from State GST, stamp and registration fees, sales tax, State excise duty, and land revenues. It also includes other taxes that are specific to each State. A strong growth in SOTR indicates healthy State finances, since it implies lesser dependency on the Centre for loans and grants.
Paras Jasrai, Senior Analyst, India Ratings & Research, said GST collection is a major driver of SOTR, accounting for 45-55 per cent of State’s tax revenues. “The broad double-digit growth in SGST collections across States has been a key reason for an uptick in their SOTR collections in Q1 FY24.”
The numbers corroborate Jasrai’s views. Madhya Pradesh, Uttar Pradesh, Karnataka, Andhra Pradesh, and Odisha have recorded over 20 per cent growth in State GST revenue during the latest quarter. The analysis of SOTR shows that different States performed differently on various taxes. For instance, Maharashtra recorded the highest growth in stamp and registration fees, while Karnataka topped in land revenues. Gujarat recorded the highest growth in excise duty collections.
On the other hand, the Centre’s gross tax revenue grew at a muted 3 per cent ₹8.94-lakh crore during the April-July period. While customs duty and Central GST grew at 27 per cent and 17 per cent respectively, corporation tax, Central Excise duties and other taxes posted a negative growth.
Jasrai said Centre’s GST collections have also been robust due to pickup in private consumption demand especially on the high end products like passenger vehicles (SUVs), high end phones, mid-income and high housing segments. “The tax rates on such items is on the higher side in the current GST slab, and thus there has been a pick-up in SGST/CGST collections in Q1 FY24 as well,” he added.