the goan I network
PANAJI
The state government is going to receive around Rs 145 crore as compensation from the central government by this month-end on account of shortfall in tax collections. This was confirmed by Dipak M. Bandekar, Commissioner of Commercial Taxes.
Bandekar said, “Of this amount, Rs 75 crore will be on account of shortfall in tax collections in the two months of November and December, 2017. The remaining amount will be on account of some error made with regards to compensation money for months prior to November.”
Bandekar explained that the central government has to compensate the state government because Goa’s collections of Goods-and-Services-Tax (GST) and Value-Added-Tax (VAT) are not growing, if we exclude VAT on petroleum and alcohol.
As per the arrangement between the centre and states, a state’s tax collections have to grow by 14% per annum between 2016-17 and 2017-18. But, if the state government’s tax collections don’t grow by 14%, then the central government is supposed to compensate to the extent of shortfall.
It is on account of this shortfall that Goa government is expecting Rs 145 crore from the central government by January-end.
Interestingly, however, state government’s collections of GST and VAT will grow by 15% if VAT on petroleum and alcohol is also considered.
Ever since GST was rolled-out on July 1 last year, the state government has struggled to grow its tax collections. To complicate matters further, the GST Council slashed tax rate on 54 services and 29 products last week.
Bandekar said, “This will badly impact state’s tax collections. It is expected that tax collections in March will show a dip.”
GST Council reduced tax from 28% to 18% on used motor vehicles (medium and large cars and sports utility vehicles), from 28% to 12% on used motors vehicles (other than medium and large cars and SUVs), from 18% to 5% on LPG supplied for supply to household domestic consumers by private LPG distributors and from 3% to 0.25% on diamond and precious stones.
This is not the first time that GST Council has aggressively slashed tax rates. In November 2017 too, the council had slashed GST on a number of items. With every cut in GST, central government’s tax collections are also coming down.
Therefore, it remains to be seen for how long the central government will keep on compensating the state government for shortfall in tax collections.
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