In what could be an indicator of the recovering state economy, the Sales Tax Department made record collections last year, most of it in the last two months of the fiscal. And the increase in tax collection was before Chief Minister Sheila Dikshit increased Value Added Tax (VAT) in this years Budget for the state.

The department collected Rs 10,368.53 crore through VAT last fiscal despite the fact that the first two quarters of 2009 showed negative growth of approximately 1 per cent.

The tax collection started recovering in November-December with a growth of 4 per cent. By January, the growth ratehad increased to 16 per cent and touched a whopping 75 per cent by the end of the fiscal.

The overall growth last fiscal was more than 45 per cent, says Delhi Sales Tax Commissioner Jalaj Srivastava, adding that the increase in VAT collection was indicative of the growth in trade after the slump in first half of last year. Predictably, the main drivers of growth were items related to the construction industry.

Last year, Delhi recorded negative growth in sales during April and May at -0.29 per cent and

-0.10 per cent, respectively. Sales started recovering only in the latter half from September, touching 54.26 per cent growth in March. This growth in sales meant, March recorded a Rs 2,345 crore increase in VAT revenue, a growth of 24.25 per cent compared to the same time last year. The total collection in the year 2008-09 was Rs 9,441.55 crore.

VAT was introduced in Delhi in 2005.