Despite VAT hike, Delhi government fails to meet revenue goal
September, 28th 2015
The Delhi government has failed to keep pace with its projected rate of revenue growth for the year 2015-16. While the government projected the revenue growth at the rate of 33 per cent in the budget, it has only managed to achieve the average growth rate of less than 13 per cent. This is despite a hike in VAT rate by the AAP government recently.
The VAT collection in Delhi has only increased by 10.81 per cent against its own target of 32 per cent.
The financial position statement of Delhi government's accounts department shows that the tax revenue up to August 31 has gone up by merely 12.93 per cent. Till this period, the government has collected Rs 7,645 crore from sales tax which was Rs 6,899.36 crore during the same period in 2014-15. Ads by ZINC
Officials said nationwide decline in the price of petrol and diesel was primarily responsible for reduced VAT collection. A major share of VAT comes from the sale of petrol and diesel. Tax evasion is another reason for reduced tax collection. However, to overcome this, the government has decided to keep an online check on all registered dealers in Delhi by introducing a new form -Delhi Sugam-2 (DS2).
This will keep details of invoices and goods receipt note in respect of goods purchased or received as stock transfer from outside Delhi.
The Delhi Government, which was able to collect Rs 18,289 crore through VAT during the President's Rule last year, has increased its target for the current financial year to Rs 24,000 crore. Similarly, the excise duty collection is also lagging behind by 16 per cent.
While the government projected the growth rate to be around 38 per cent; the actual growth rate is only 22 per cent. The revenue raised through excise duty was Rs 1,273 crore till August 31 in the previous financial year while the collections made this year has been to the tune of Rs 1,557 crore.
The Government had set the target of 38 per cent increase in revenue collections through excise duty. The total revenue target set by the Arvind Kejriwal Government for the current financial year was Rs 34,661 crore, which is almost Rs 8,000 crore more than what the administration had collected in the year 2014-15.
Similarly, the transport department has been able to collect revenue of Rs 660 crore till August 31 from the taxes on registration of vehicles. However, the tax collection was Rs 616 crore during the last year. The percentage variation in taxes on vehicles is a meager 7.8 per cent.