Though the state has incurred losses with many state government taxes being subsumed in Goods and Services Tax (GST), the new regime proved helpful when it comes to sales tax. Sales tax collection went up by 15.6% in three months ahead of GST launch on July 1. Discounts being offered by traders on household products and them clearing their tax dues ahead of GST caused this hike.

The state government, which has set its annual target of sales tax (now subsumed in GST) at Rs 92,838 crore, saw the sales tax collection of Rs 8,124 crore in June 2017 against the collection of Rs 6,770 crore in June last year. Not only in June, but even April and May saw the monthly revenue collection of sales tax of Rs 9,735 and Rs7,795 crore against Rs 8,692 and Rs 6,733 crore in the same months last year. While 20% more sales tax was collected in June, April and May saw an increase of 11.99% and 15.79%.

“The sales tax collections reflect a month late in account books, which means the tax collection in June, is actually levied in the month of May. This means the actual collection for the month of June — the last month before GST came into force — will be known next month and is likely to again be higher in average,” said a sales tax officer.

The major contribution in the sales tax collection in these three months has come from automobile, white goods such as refrigerators, washing machine, and FMCG products. According to state officials, sale owing to discounted rates of household goods in May and June have majorly contributed to this rise. “For the first three months of the fiscal year, the average collection rose by 15.6%, which is good for the state revenue. Since January, the sales tax and VAT collection had shown an upward trend as markets had started picking up. But the credit to the rise in May and June goes to the GST regime as manufacturers and retailers wanted to clear their old stocks and avoid cumbersome procedure of claiming credits on them,” said Rajiv Jalota, sales tax commissioner.

The rise in sales tax revenue will help the state achieve its annual target of Rs1.9 lakh crore from tax revenue. “More than 45% of the tax revenue of the state comes from sales tax alone. The substantial rise in the collection will help the cash-strapped government reduce its fiscal deficit, particularly after the announcement of a whopping loan waiver to farmers.

Source: Hindustan Times