New Delhi: In a good news for state governments that have been facing financial constraints in the last two years due to the outbreak of Covid-19 global pandemic, their GST collection is expected to grow by a whopping 24.7 percent in the current fiscal (April 2022 to March 2023 period), according to a calculation done by SBI Research.
Odisha, Jharkhand, WB report slow growth- According to the latest data, most of the states, except three states in the eastern part of the country - Odisha, Jharkhand and West Bengal - are experiencing higher growth in the GST collection. Jharkhand is the only state in the country where growth rate in GST collection in the current financial year over the previous financial year is expected to be in single digit as the state expects a mere 5.4 percent growth in its GST collection. Similarly, in West Bengal the growth rate in GST collection is expected to be 13.3 percent and in case of Odisha, it is expected to be 10.9 percent in comparison with their GST collection during the previous financial year.
Gujarat, UP top gainers- Out of the 18 major states analysed by the SBI Research Team, Gujarat is the only state which is expected to achieve more than 40 percent growth in its GST collection this year on a year-on-year basis, followed by Uttar Pradesh with a projection of more than 30 percent increase in its GST collection this year.
GST collection to dip this year- Though the growth rate of GST collection is expected to decline in the next financial year on year-on-year basis but according to an estimate by Soumya Kanti Ghosh, Group Chief Economic Adviser of State Bank of India, it will still be in double digits as GST revenue of states is expected to increase by 16 percent in the FY 2023-24.
Most of the states are projecting a moderate growth rate of 10-20 percent in their GST collection in the next fiscal while the Centre has also projected GST revenue growth at 12 percent in the next financial year beginning on Saturday. Secondly, only a few states have budgeted a small amount of GST compensation indicating the end of the GST compensation regime which ended in mid-2022 after the expiry of the initial five-year period after the introduction of GST in July 2017.
Buoyant VAT, Sales Tax collection- As the country’s economy comes out of the shadow of Covid-19 global pandemic, state governments are expecting buoyancy in their sales tax and value added tax (VAT) collection in the current fiscal and also in the next financial year. As a result, states’ sales tax and value added tax (VAT) collections are expected to grow by an average 13.6 percent in FY 2023-24 followed by a similar growth rate in the next financial year as well.
State of Gujarat is projecting maximum growth in its sales tax and VAT collection, followed by Chhattisgarh (24.4 percent), Telangana (22.3 percent), West Bengal (21.9 percent), Tamil Nadu (20.9 percent) and Maharashtra (19.8 percent).
SOTR growth- As per the revised estimates for the current financial year ending on March 31, the States' own tax revenue is expected to grow by 21 percent while for the next financial year beginning on April 1, the states have budgeted the average growth of 16 percent to around Rs 19.5 lakh crore.
“This seems to be on the higher side as some states such as Uttar Pradesh have budgeted 42 percent y-o-y growth in FY 2023-24 over FY 2022-23. Even Jharkhand has budgeted higher growth of 25% in FY 2023-24,” Soumya Kanti Ghosh said.
