‘Robust GST will help states give up compensation’
NEW DELHI: The trend of robust goods and services tax (GST) revenue collection of ₹1.51 lakh crore a month on average in the June quarter brings states’ GST revenue receipts closer to the level of revenue protection they seek, according to the revenue secretary Tarun Bajaj.
The Centre gave states GST compensation for five years till June 30 to meet the gap between their actual revenue receipts and their assured revenue in the GST regime—a 14% annual growth in revenue over the base year of FY16.
However, this revenue protection scheme has ended, and discussions in the GST Council on states’ demand for an extension remain inconclusive.
“Our average GST collection is ₹1.51 lakh crore. If somehow we reach ₹1.55-1.6 lakh crore, then the compounded annual growth rate itself becomes close to 12% from the base year. This year, we are going to give a compensation of more than ₹1 lakh crore. About ₹87,000 crore has already been released this year. We will give around ₹20,000-30,000 crore more,” Bajaj said in an interview.
The average monthly GST collection of ₹1.51 lakh crore is an improvement of 37% over
what was collected at the same time a year ago. GST collections in FY22 of ₹14.8 lakh crore is an improvement of over 30% from what was collected in FY21, a trend that gives the central government confidence that states will be able to manage without GST compensation.
Bajaj expressed confidence in meeting the revenue collection targets in FY23 in spite of the reduction in excise duty on petrol and diesel.
“We will meet the target. Yes, excise duty has been cut sharply. We are working on GST. This time, first-quarter GST collection has grown by 37%, and the average for the first quarter is ₹1.51 lakh crore,” Bajaj said, indicating a possible 25-30% annual improvement in GST collections in FY23.
The government will also get some revenue from the cess imposed on crude oil and the export of petrol and diesel last week.