The Hindu Business Line : VAT: States revenue growth rate slips to 22.4%

Down slide
Tax revenues of States stood at Rs 1,20,382 cr during April-Feb 2007.
Revenue collections have grown only by 14 pc to Rs 11,232 cr in Feb 2007.

New Delhi April 9 Tax revenues of the 31-VAT implementing States and Union Territories grew 22.4 per cent in April-February 2007, markedly lower than the 25-27 per cent growth rates seen in the first eight months of fiscal 2006-07.

Official sources said that tax revenues of these States stood at Rs 1,20,382 crore during April-February 2007, as compared to Rs 98,325 crore in the same period in the previous year.

From December 2006, the overall growth rate (April-December) has been on the slide to about 24 per cent, to about 23 per cent in April-January and now to 22.4 per cent.

Ministry confident

The moderation in growth rates in recent months notwithstanding, the Finance Ministry is confident of at least 20 per cent increase in overall tax revenues of the VAT implementing States during fiscal 2006-07.

Official sources highlighted that revenue collections grew only 14 per cent to Rs 11,232 crore in February 2007, thereby somewhat pulling down the overall growth rate during April-February 2007.

"There is no one particular reason why tax revenues of VAT implementing States have grown only by an average 14 per cent in February. Uttar Pradesh (which is a non-VAT State) has also recorded similar growth rate," sources said.

`One-off performance'

However, it was pointed out that the "initial figures" that were coming in for March 2007 was "very encouraging" and that the February 2007 could be a "one-off performance".

Indications are that the Empowered Committee of State Finance Ministers on Value Added Tax may, at its forthcoming meeting on April 14, seek views of the States on the reasons behind the somewhat low growth in February.

Besides the issue of year-end adjustments and refunds, another factor that might have contributed to the February performance was the "flat growth" in tax revenues of large States such as Tamil Nadu.

Tamil Nadu started implementing VAT from January 1, 2007. The State's tax revenue growth was about 18 per cent (prior to VAT implementation), lower than the national average. As Tamil Nadu has a large revenue base, its inclusion had an impact, officials said.

The tax revenues of some of the major VAT implementing States during April-February 2007 are: Andhra Pradesh Rs 13,749 crore (Rs 10,917 crore); Delhi Rs 5,957 crore (Rs 5,123 crore); Gujarat Rs 10,253 crore (Rs 7,822 crore), Karnataka Rs 9,218 crore (Rs 7,283 crore), Maharashtra Rs 20,752 crore (Rs 16,799 crore), Kerala Rs 7,472 crore (Rs 6,032 crore), Rajasthan Rs 5,422 crore (Rs 4,516 crore), West Bengal Rs 5,270 crore (Rs 4,482 crore) and Tamil Nadu Rs 14,392 crore (Rs 12,331 crore).

Uttar Pradesh, which has not implemented State-level VAT, has recorded sales tax revenue of Rs 11,210 crore during April-February 2007, as compared to Rs 8,983 crore in the same period in the previous year.