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New Govt must modernise the tax administration

April, 18th 2014
Though the Modi government claims the state is in good financial health, the state exchequer's earnings seem to have fallen drastically. The state's taxmen failed to meet the Rs 45,000 crore target, falling short by a whopping Rs 4,068 crore. This has created a huge deficit and sent into a tailspin the state finance minister's tall claims about a revenue surplus budget. According to the state finance department's official data of final revenue collections as on 31st March 2014, against budgeted and revised target of Rs 45,000 crore for the financial year 2013-14, all the state's tax collection agencies for VAT/CST, stamp duty and registration fees, RTO tax etc., have together netted only Rs 40,932 crore. In 2012-13, the state's total tax revenue was Rs 39,465 crore. Against 2012-13's Rs 4,427 crore stamp duty and registration fees collection, in 2013-14 the state government earned Rs 4,735 crore. The target for this head for 2013-14 was Rs 5,000 crore. Against Rs 4,407 crore in the last financial year, the state government earned Rs 4,693 crore in electricity duty in the financial year that ended on March 31. In 2012-13, the state road and transport department earned Rs 2,276 crore in tax while this year the figure dipped to Rs 2,274 crore. A very senior officer of the state finance department said that, "Overall recession has hit tax collection targets badly, which will adversely affects the state finances. The reason for the major gap in revenue is because of lower income on petroleum products. Due to cuts in petroleum products prices mid-year, our tax collection has gone down. "Moreover, two refineries were paying us 2% CST on the product they shipped from the state. Now, due to the new refinery in the north, companies supply the northern markets from there itself, and use Gujarat refineries' products for exports. So this has hit our income hard. Though there is a major gap in the overall tax collection this year, we have decided to increase 2014-15 targets at least by 10% for all taxes during the tabling of the regular budget in June 2014."