The Hindu Business Line : Kerala VAT collection shows improvement

The collection of value-added tax (VAT) in Kerala in the first four months of the current year exceeded that in the same period of the previous year by Rs 600 crore.

The Finance Minister, Dr T.M. Thomas Isaac, said here on Thursday that this was an encouraging sign and that he would revise the target for VAT collection during the year to Rs 4,600 crore. In the State budget presented in June, he had pegged the annual collection at Rs 4,000 crore.

The tax collection in the previous year was Rs 3,039 crore and if the new target was realised, it would mean a 50 per cent year-to-year increase in the collection of commercial taxes in the State, he said.

Addressing a meeting of tax officials, the Finance Minister said collection targets would be fixed at individual and unit levels and good performance rewarded. Also, a system to monitor efficiency would be put in place.

He noted that VAT collection in the previous year showed a buoyancy of just 5 per cent. If the revenue receipts were to be brought on par with the revenue expenditure, the tax collection should increase by at least 20 per cent each over the next four or five years, he said.

As of now, the State's financial position is precarious. The pay revision for Government employees has put an additional burden of Rs 3,000 crore on the exchequer.

Besides, going by the current trend, receipts by way of loans from the National Savings Scheme would fall short of the expectation by Rs 1,200 crore, the Minister said.

Further, the Centre has indicated that there may be a cut in assistance from the Debt Relief Fund. Income from excise duty and non-tax sources, too, is below expectation. The Commercial Taxes Department should strive to make good the shortfalls in revenue from other sources, Dr Isaac said.