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Finance Ministry crafting strategy to boost GST revenues
Why in the news ?
- Alarmed by a nearly four-fold rise in GST compensation to states for June-July, the finance ministry is crafting a strategy to shore up tax revenue and engaging with states to identify issues hindering their collections.
More in the news
- The Centre paid Rs 14,930 crore to compensate states for revenue loss incurred in June and July, a nearly four-fold jump compared to Rs 3,899 crore paid for the months of April and May.
- Thus, there has been a spike in the bi-monthly GST compensation paid to the states by the Centre.
- Finance Secretary has started meeting with GST officers, both from central and state tax departments, in the state capitals to understand issues plaguing the GST collections.
- The reason for increased compensation also varied from state to state. For instance, in one of the cases, a state saw a huge outgo on account of VAT refund following a court verdict, the official added.
- A discussion to shore up revenue has already happened with four states: Punjab, Himachal Pradesh, Puducherry and Jammu and Kashmir, while a dialogue with Bihar and Uttarakhand is slated to take place later this month.
- The finance ministry has targeted monthly GST collections to be Rs 1 lakh crore for this fiscal, but the actual mop up has fallen short of the target month after month.
- The loss of revenue to a state is calculated based on the difference between the actual realisation to a state under GST regime and the tax revenue it would have got under the old indirect tax regime after considering a 14 percent increase over the base year of 2015-16.
Source
The Hindu.