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Only 10 States have revenue deficit of over 20%, says Jaitley
The average revenue shortfall of States due to the Goods and Services Tax has fallen to 13% in the ongoing financial year up to August 2018, from 16% in 2017-18, Finance Minister Arun Jaitley said on Friday after the 30th GST Council meeting. The Finance Minister said that, while most of the meeting was around procedural aspects, there were two main items on the agenda: a review of the revenue position, and the Kerala government’s request for an additional GST rate to finance the relief and recovery efforts in the State following the recent devastating floods.
“Article 279(A)(4)(f) of the GST Act has a provision that, with the permission of the GST Council, a special rate can be imposed to raise additional resources during any natural disaster,” Mr. Jaitley said at a press conference. The issues of concern, which the GoM would look into, will include whether the special rate would be applicable only in Kerala, thereby taxing those who are already recovering from the disaster, or would it be applied across the country, Mr. Jaitley said. Another issue is whether it would be applied on all goods or only on the sin and luxury goods. Some States, he said, raised concerns that applying the rate only to Kerala would undermine the ‘one nation, one tax’ nature of GST and so should be avoided. Tax analysts are of the view that a change to the overall GST structure would place a further burden on businesses. “It is hoped that the panel set up to evaluate the introduction of a cess suggests alternative fund raising measures without disturbing the GST architecture,” M.S. Mani, Partner at Deloitte India said. “Any changes to the GST framework would make it more complex for businesses besides setting up a precedent for similar changes in future.” “The periodicity of said cess should be fixed, else it will become a cess for perpetuity,” Parag Mehta, Partner, NA Shah Associates said.
Mr. Jaitley said the GoM would also look into setting rules specifying what kinds of natural disasters would qualify for the special rate. Regarding the State-wise revenue position, the Union Finance Minister said that there were only 10 States with a revenue deficit of more than 20%, and that there were six States that had a revenue surplus. He also said the revenue position for States was by and large stronger across the board in 2018-19 than in 2017-18.
Source : https://www.thehindu.com/todays-paper/tp-business/states-average-gst-revenue-shortfall-down-to-13-in-fy19/article25075991.ece
