The shortfall in the revenue estimated for all states for first four months of the Goods and Services Tax is about Rs 39,111 crore, West Bengal Finance Minister Amit Mitra said today.
For all states, revenue of Rs 43,013 crore a month is protected, according to Mitra. For four months, it should have been Rs 1.72 lakh crore and “we got Rs 1.33 lakh crore”, Mitra said during a panel discussion at FICCI’s 90th annual general meeting.
The protected revenue from all sources under the GST is estimated assuming a 14 percent growth. Any shortfall has to made up from the compensation fund.
States collected Rs 87,238 crore through State GST for July to October, according to a government press release. For inter-state trade, Rs 31,821 crore was released to states. An additional Rs 13,882 crore was released for settlement, the release said.
Going by the numbers for the first four months, Mitra said he was worried that the amount due from the central government to the state could rise to Rs 80,000 crore by the end of the financial year.
Sushil Kumar Modi, deputy chief minister of Bihar, also part of the panel, said he was optimistic that states will not need GST compensation after two to three years.
Remove Tax Details From Consumer Invoices, Says Modi
Modi also suggested that the break-up of detailed taxes in invoices issued to consumers should be removed. Only the maximum retail price should be mentioned, and other details should be omitted, he said.
Giving an example of New Zealand, Modi said invoices up to $1,000 there don’t have the tax-break up.
Case For Petroleum Under GST
Modi also hinted at allowing states to levy taxes over and above GST if items like petroleum are brought under the new nationwide sales tax. “People think that the products will be in the highest slab after petroleum products are brought under the GST. But states will have the liberty to levy taxes over and above GST."
Modi said states get 40 percent of their revenue through petroleum and earn another Rs 31,000 crore from electricity duty. The GST Council will try to bring electricity, real estate, stamp duties, and petroleum products under the new indirect tax regime in the coming days, he said.
Haseeb Drabu, Jammu and Kashmir finance minister, said bringing petroleum under the GST looks more likely than the inclusion of real estate. The GST Council should wait for the system to stabilise till March to bring real estate under the new regime, he said on the sidelines of the event.
Need To Ease Composition Scheme
The Composition Scheme needs to be redesigned to allow claiming input tax credit for businesses that purchase supplies from dealers who have opted for the scheme, Drabu said.
Traditional supply-chain networks have been broken as big businesses are not buying from dealers who avail the scheme as input tax credit is not available to them, he said.
Under the composition scheme, traders and manufacturers pay 1 percent of their turnover as GST. Those who opt for the scheme and businesses who buy supplies from such dealers cannot avail input credit.
Also, anomalies in inputs being taxed at a higher rate than outputs will drive future rate reductions, he said.