Amidst a tightrope walk for the government that is implementing guarantee schemes, Karnataka is set to miss its revenue target this year by about ₹ 10,000 crore for a range of reasons, including drought and GST issues, though overall State’s own tax revenue is estimated to grow by 12 %.
Speaking on other reasons for not meeting the target, a Finance Department official said that the State had set an ambitious target for 2023-24, anticipating higher growth that did not happen.
Higher targets
Despite not being able to reach revenue targets for 2023-24, the State government has set much higher revenue targets for all State’s taxes in 2024-25. While target for Commercial Taxes has risen by 11.5%, target for Excise has risen by 7%, Stamps and Registration by 4% and Motor Vehicle Tax by 13%. However, the official said, “We have set realistic targets for 2024-25 year.”
Barring motor vehicle tax, the State seems to have slipped in commercial tax that had a target of ₹ 98,650 crore, excise duty target of ₹ 36,000 crore, stamps and registration target of ₹ 25,000 crore.
The State has lost out about ₹ 2,000 crore in GST, including about ₹ 1,200 crore towards compensation and ₹ 800 crore towards IGST settlement. “The Centre has adjusted about ₹ 2,000 crore to earlier higher payment made to the State and we will have this reduced in the total GST given to the State,” a Finance Department official said. Another official said GST collection had also come down due to reduced government spending on public works which attracts 18% GST. “This has, however, picked up now,” he added.
While drought has played a major role in reduction of GST collection, the price stabilisation in steel and petroleum products had also reduced GST collection. “The government forecast the collection based on 14 % growth in this sector, which did not happen. Prices that were rising stabilised this year.” Overall, the growth rate of resources was expected to be about 18 % while actual growth rate was about 14 %, the official explained.
Eventually, the total GST collection could be around ₹ 95,000 crore and the stamps and registration department could fall short of the target by about ₹ 5,000 crore and excise duty could come down by over ₹ 1,000 crore by the end of this financial year.
Guarantees contribute little
Meanwhile, though the government has claimed to have put ₹ 4,000 to ₹ 5,000 a month in poor families contributing to revival of economy, government sources said that though it contributed to GST collection, but it has not been much. “Most of the products that the beneficiary families spend on is necessities that mostly have 0% or 5 % GST. There is definitely money circulation in economy, but has not contributed much to GST collection.”
