In yet another acknowledgement of the economic slowdown, the State government has lowered the growth rate of the revenue from commercial taxes for the current year.
Originally, the revenue was expected to grow by about 9.41%. Now, the figure has been brought down to 5.42%.
In other words, the government is expecting to net around ₹3,511 crore lesser than the amount it was hoping to get at the beginning of the year.
As per the revised estimates, the collection for 2019-20 is ₹92,666 crore.
The revised growth rate marks a steep fall from the 20% growth the State saw in 2018-19.
During the Budget speech last week, Deputy Chief Minister O. Panneerselvam projected a growth rate of 7.27% for the State’s economy during 2019-20, as against 8.17% in 2018-19.
He also referred to the adverse impact of the slowdown on his government’s receipts, especially Goods & Services Tax (GST), Value Added Tax (VAT) on non-GST goods and Motor Vehicle Tax.
Two broad components
Under the head of commercial taxes, there are two broad components – GST and non-GST or VAT on products such as petroleum and liquor.
As part of the GST system, a State gets GST compensation and Integrated GST (IGST) settlement, apart from collections through State GST.
Keeping 2015-2016 as the base year, a growth rate of 14% per year has been adopted for calculating the revenue of the States to determine compensation.
The settlement of IGST, imposed on inter-State sales, is provided to manufacturing States as GST is a consumption-based tax.
Shyam Sekhar, an investment banker, said Tamil Nadu, being a leader in the auto industry, had to take a hit as the industry had been affected very badly.
Yet, there was substantial scope for further revenue collection if the authorities acted against tax evasion stringently, he said.
