VAT windfall from fuel makes up for drop in GST revenue

The VAT revenue is up by 5.5% during the April-November period, growing to ₹3,690 crore in 2020-21 from ₹3,496 crore in previous year

CHANDIGARH: Punjab has reported a massive 73% jump in its value-added tax collection from petroleum products in November even though there is a drop in the goods and services tax revenue.

The value-added tax (VAT) revenue soared to ₹747.15 crore in November from ₹431.64 crore collected during the corresponding month last year, according to revenue mop-up data compiled by the state taxation department. The surge in revenue, bulk of it from diesel, petrol and other petroleum products, came during the farmers’ rail roko protest that had brought the movement of freight and passenger trains to a complete halt in the state.

The protesting farmers had kept the train tracks blocked for almost two months to protest against the three farm laws.

“Of the VAT collection, 90% comes from diesel and petrol and the remaining 10% from three other petroleum products, including aviation turbine fuel, and liquor. Diesel and petrol consumption saw a huge jump during this period due to increased use of road transport in the absence of trains,” a senior taxation officer said on condition of anonymity.

The jump in VAT collection is unprecedented and the data is being analysed by the department.

Overall, the VAT revenue is up by 5.5% year-on-year during the April-November period, growing to ₹3,690 crore in 2020-21 from ₹3,496 crore in the previous year.

The windfall gain in November, which is revenue for October collected in the subsequent month, has more than made up for the drop in the goods and services tax (GST) collection which is 5% lower than last year.

The GST revenue, including state goods and services tax (SGST) and integrated goods and services tax (IGST), in November stood at ₹1,067.81 crore as compared to Rs 1122.93 crore in the corresponding month of 2019, according to official figures. The 4.91% yearon-year decline in the revenue mop-up in the festive season came after a robust growth in September and October after months of coronavirus pandemic-induced lockdown and restrictions.

The GST collection had registered 8% year-on-year growth in September followed by a double-digit growth of 14.1% in October, signaling economic recovery and improvement in business sentiment with pent-up demand driving sales. The percentage increase in revenue in the state was higher than the increase in all-India growth in both these months. In November, the revenue allIndia GST revenue has posted a 1.4% annualised growth whereas the state’s collection has seen a drop due to the ongoing stir and restrictions imposed due to the coronavirus pandemic.

However, the taxation official said train blockade does not seem to have had much impact on GST collection. “There have been more GST transactions in October as compared to last year, but tax collection is lower as people have adjusted more of IGST against the input tax credit available, so, cash payment is less,” he said.