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GST: Fear of dip in VAT collection hitting growth haunts officials
August, 06th 2016

Haryana's BJP leadership may be jubilant over the passing of the Goods and Services Tax (GST) Bill in the Rajya Sabha, but government officials believe that initially the state would face revenue loss.
Even the fact that reduction in the tax will be compensated by the Centre for five years, it not allaying their fears.

Sources in the excise and taxation department told TOI that Haryana has been conveying its view point on this to the Centre. "With introduction of the GST, we may lose our growth rate of revenue as Value Added Tax (VAT) collection will come down," says a senior official.

However, the official adds that the easy and simple GST will encourage even those to pay the tax, who currently don't pay it. "The tax will increase subsequently with more people coming forward to pay the tax and the state will be self-dependent in handling its revenues," he says.

The state receives a major chunk of revenue from VAT. Haryana had gone solo and introduced this tax system from April 1, 2003, to tell a success story of tax collection to the country. The state has targeted revenue of Rs 28,750 crore from VAT during current financial year.

"The exact possible loss to the state with introduction of GST will depend on the tax rate fixed by the Centre under new system of GST," says the officer. However, state finance minister Captain Abhimanyu believes that the states would not incur any revenue loss after implementation of GST. "In case of losses, if any, the central government would offer compensation up to five years after its implementation," said the minister.The minister said that state government is fully prepared to implement the proposed tax law. The state excise and taxation department was preparing a roadmap for its implementation as the concerned officers and officials have already been imparted training on how to implement it effectively.

He said that as the bill has now been passed during the Monsoon Session, all states could complete the proceedings in their legislative assemblies and pass this bill in the budget session in 2017. By then, this bill would take the form of a law, he added.

Captain Abhimanyu said that the revenue growth of the state was increasing and was better than that of the neighbouring states. "This would further increase after implementation of the GST Bill," he said adding that the World Bank and other financial institutions had also hailed the GST Bill.

He said that foreign investors were also keen for implementation of this bill and asked him about the system during his tours to the the US, Japan, Singapore, Australia and Canada.How the GST affect Haryana?
- Initially revenue from VAT will come down

- Easy implementation of the tax system

- The new system will curb on tax theft

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- The state will get powers to impose service tax on service sector like hotels

- Easy system will enhance tax compliance

- The state will be able to track transactions easily

- The traders to face action quicker, if they run away from paying the tax

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