Tax collection growth falls, tough measures likely

REVENUE MATTERS Tax collection saw a growth of 7.05% in 201617. Govt had earlier said it was expecting a growth of 20.84%

NEW DELHI: The growth rate in Delhi’s tax collection saw a decline of 3.92 percentage points in the financial year 2016-17 as it came down to 7.05%, compared to the previous year’s 10.97%.

According to Delhi Statistical Handbook 2017, which was released on Saturday by deputy chief minister Manish Sisodia, the state’s tax collection in 2016-17 was ₹19,717.91 crore which is ₹1,299.56 crore higher than the 2015-16 collection of ₹18,418.35 crore – a growth of 7.05%.

The year-on-year growth rate in 2015-16 was 10.97%.

Tax department officials said the slowing down of tax collection could be due to the November 2016 demonetisation of highvalue currency notes. Post-demonetisation, initially there was a spike in Value Added Tax (VAT) collection but officials said that in the subsequent months, collection dipped significantly, leading to an overall decline in tax collection for the full financial year.

The Aam Aadmi Party (Aap)-led Delhi government had previously said it was expecting a growth of 20.84% tax collection for the year 2016-17.

The handbook also shows that on an average, Delhi’s tax collections have grown at a steady 10% or more in the past few years – barring a major blip in 2014-15, when the growth rate was just 0.58%.

This minuscule growth was attributed to the power tussle in the state as Delhi witnessed two elections within a year, with the rule of lieutenant governor in the interim period.

In Delhi’s Economic Survey report, the Arvind Kejriwal-led government had set a target to scale up the tax collection target for 2016-17 to an ambitious ₹24,000 crore — a full 30% over (in crores) 2011-12 2012-13 2013-14

the ₹18,500-crore target set for 2014-15.

Tax collection registered a growth of 13.87% in 2013-14 and 14.85% in 2012-13 from its previous year.

In the tax revenue, VAT constitutes the major part of government’s receipts, making up nearly 65% of total collections.

In May 2016, government had notified the new VAT rates, which made hybrid cars, battery-operated vehicles and e-rickshaws cheaper. This was 2014-15 2015-16 2016-17

done to promote environmentfriendly vehicles.

Also VAT on all types of footwear/ready made garments was reduced from 12.5% to 5%, which could also be one of the reasons behind less tax collection, tax department officials said.

According to officials, the budget for the year 2018-19 is expected to be presented in February and government may take tough measures to increase the tax collection.