GST tax base doubles, but collection up only by 14% in Karnataka

Karnataka's State Goods and Services Tax (SGST) collection for the first five months (April- August ) of financial year 2019/20 (FY20) has seen an increase by 14.3 per cent compared to the corresponding period last year. Of the SGST target of Rs 76,046 crore for FY20, Commercial Tax Department has already collected Rs 33,618 crore.

Over the last two years since the implementation of GST, the state has successfully been able to double the number of registered businesses from 4.5 lakh to 8.16 lakh till date. A senior tax official that Business Today spoke to said that collections have improved largely due to increased effective implementation and compliance by businesses. While the increase in the GST taxpayer base has not translated into substantial  increase in the tax collection, the same tax official, who did not wish to be named said, "Only 20-30 per cent of the GST taxpayer base in the state currently contributes to the major portion of the kitty. The new businesses on-boarding into GST system may not have any significant impact in terms of increased collection." However, currently the department does not have a sectoral GST collection data or analysis that could shed some light on how various industries are performing in the state.

Last week, Chief Minister of Karnataka, B S Yediyurappa, met heads of various tax departments to review their performance. The state's excise collection seems to be currently on track to meet the target. Excise revenues of Rs 9,145.36 crore (April-Aug 2019) have already been collected against the target of Rs 20,950 crore while stamps and registration department has mopped up Rs 4,620 crore (April-August 2019) against a target of Rs 11,828 crore for FY20 with property registrations in Bengaluru seeing an uptick of 3.86 per cent over the last one year.

Earlier this year, former Chief Minister of Karnataka H D Kumaraswamy, after attending the first Governing Council of Niti Aayog, chaired by Prime Minister Narendra Modi, had urged for an extension of compensation extended to states . While implementing the GST, the Centre had assured the states to compensate them for loss of revenues for five years until 2022. He had asked the Centre to extend GST compensation beyond five years, saying that the state will face "severe financial crunch" after the recompense period ends in 2022.

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