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Indirect Tax Collection Under Gst Goes Down By 30 Percent
October, 12th 2017

The indirect tax collection in Uttar Pradesh under the new tax regime goods and services tax (GST) has fallen by 30 per cent in the July-September period in the current financial year 2017-18, as compared to the earlier tax regime Value Added TAX (VAT) during the corresponding period in last fiscal 2016-17. The new one tax one nation regime came into force across the nation from July 1, this year.

According to official data, the state’s net collection under the new tax regime GST stood at Rs 8,169 crore in the first three months. The tax collections during the same period in last financial were Rs 11,779 crore, thus a shortfall of over 30 percent in tax collection. The shortfall is as high as 45 percent if compared with the target of collecting Rs 14,887 crore under GST as the total collections are Rs 8,169 crore.

However, the state’s tax officials are hopeful of a turnaround in the coming months. Officials said for many traders and business establishments the compliance cost of the new tax regime is high and for some the procedure is complicated besides the glitches in GST website GSTN. Official sources said it would take a little while for the traders to be more familiar with the new processes and requirements under GST, especially with regard to compliance and filings. In GST, any shortfall in tax revenue would be compensated by the Centre for the next five years. Petroleum and alcohol products, stamps and registration are however yet to be brought under the purview of the GST.

Moreover the official sources said the new tax regime is disruptive economic reform as it has fundamentally altered the indirect taxation. It has particularly disrupted the trade in informal sector of the economy which supplies goods and services to the formal or organized sector of the economy. ``The collections by the end of the current fiscal will be as per target and even surpass as the businesses of informal sector of economy will soon be integrated with the new tax regime’’, said an official.

UP government for the current fiscal 2017-18 has set a target of Rs 65,000 crore from GST. The proposed target is around 27 per cent higher than the previous year’s net tax collections of Rs 51,290 crore against the target of Rs 55,000 crore. Since UP is primarily a consumer-centric state with a majority of goods being imported from neighbouring states, it was projected that the state would be a net gainer under the now three-months-old GST regime.

Additional gains under GST was expected to give the state the much-needed headroom for meeting its additional expenses, arising out of promises made during the run-up to the UP assembly polls and other expenditures on the development front.

“Although effective tax rates on a majority of consumer items, especially those used by the economically marginalised as well as the middle-class, has dropped, yet we are confident of expanding our tax kitty, owing to better tax administration and the weeding out of tax evasions under GST,” said an official of the commercial tax department. Under GST as many as 81 percent of the goods and services are covered in tax slab of 5 to 12 percent and remaining 19 percent sin products like tobacco and its products and cigarette, luxury vehicles and other luxury goods are under 28 percent slab.

The GST council , headed by the Union finance minister and includes the finance ministers of the 29 states on October 6 had decided to further liberalised tax rates and compliance under GST conceding to a long-standing demand of the traders and small businesses operating . The reduction in tax rates and simplification of the compliance is likely to further spur tax collections by boosting economic activities and stoking demand for consumer goods, especially in the current festive season, which accounts for around 30-40 per cent of net sales clocked by most businesses.

GST is touted to be the biggest overhaul in the country’s taxation structure since independence, following the principle of one nation, one tax all existing taxes were subsumed under the GST regime. On May 16, the state assembly had unanimously passed the UP GST Bill 2017, a day after it was tabled the state’s chief minister Yogi Adityanath.

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