GST Council Meet: India Forms Panel To Study Natural Disaster Cess

Six States Report Revenue Surplus

The matter of helping states bridge revenue shortfall that they are currently reporting was also discussed at the meeting. Six states, mostly consumption-led, are reporting revenue surplus in April-Aug. 2018 period, Jaitley told reporters.

The states are:

• Mizoram.
• Nagaland.
• Manipur.
• Arunachal Pradesh.
• Sikkim.
• Andhra Pradesh.

The remaining 25 states are reporting a revenue shortage ranging from 3 percent to 42 percent. Telangana and Puducherry reported the least and maximum revenue shortage, respectively.

Revenue Secretary Hasmukh Adhia visited five states that were reporting revenue shortfall— the gap between the anticipated 14 percent increase in states’ revenue and its actual indirect tax collections—and submitted a report on his findings at the meeting.

The central government compensates states for any shortfall they report in indirect taxes subsumed under GST, keeping the base year as 2015-16, and calculating a 14 percent increase every year for first five years of the implementation of the new indirect tax.

One of the reasons states are reporting the shortfall is they had special powers to levy taxes like purchase tax or entry tax which inflated their tax base in 2015-16, Jaitley told reporters. As these taxes got subsumed under GST, they are facing difficulty in meeting the projected 14 percent increase in indirect taxes.