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Tamil Nadu Government expects its own tax revenue to see a sizeable increase in the coming years, supported by the revival in economic growth and systemic improvements being undertaken across revenue areas.
“Economy is picking up and we have seen growth kicking in from this January onwards. Hopefully, there will not be any disruption like we faced in the last few years. We are undertaking a lot of systemic improvements with technological intervention across departments such as commercial tax, stamp and registration etc. With all these, we expect State’s Own Tax Revenue (SOTR) to go up,” N Muruganandam, Additional Chief Secretary-Finance, Government of Tamil Nadu said during a post-budget interaction.
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State Budget: Tamil Nadu cuts revenue deficit by over ₹7,000 crore in FY22
Fiscal deficit for the period was lower at 3.80 per cent as against the budgeted 4.33 per centThe white paper on the State’s finances, brought out by the DMK-led government last year, highlighted the deterioration of the own tax revenues to GSDP ratio of Tamil Nadu.
Fall in SOTR
SOTR accounted for close to 70% of the total revenues till 2013-14. Subsequently, the proportion of SOTR to total revenue declined and stood at 62.82% in 2020-21.
“SOTR growth rate was higher during 2006-11 (11.46%) which came down to 4.32% during 2016-21. In 2019-20 it was just 1.83% (pre-Covid)“
The average of SOTR as a percentage of GSDP stood at 7.98 per cent during 2006-07 to 2010-11 period. It dropped to 7.61 per cent during 2011-12 to 2015-16 period and 6.15 per cent during 2016-17 to 2020-21.
The State is projecting 17 per cent growth in SOTR, which is estimated at ₹1,42,800 crore (budget estimate) for 2022-23 over ₹1,21,858 crore (revised estimate) for 2021-22.
The projected SOTR for FY23 will be 62 per cent of its overall revenue receipts of ₹2,31,407 crore (budget estimate) for 2022-23. Commercial tax is a major component as it makes up three-forth of SOTR.
Commercial tax revenue
For the next fiscal, the State government expects a 16 per cent growth in commercial tax revenue which has been projected at ₹1,06,765 crore for 2022-23 as compared to ₹91,840 crore (revised estimate) in 2021-22. State excise collection is pegged at ₹10,589 crore for 2022-23 as compared to ₹8,167 crore (RE) in FY22, a growth of 30 per cent.
Overall revenue from liquor sales are estimated at ₹36,000 crore for FY23, while FY22 revenue would see a drop, said Muruganandam.
The State projects a 14 per cent rise in revenue from stamp and registration charges, which is pegged at ₹16,323 crore for FY23 as compared to ₹14,325 crore (RE) in FY22. Revenue through collection of taxes on motor vehicles is expected to grow 27 per cent at ₹7,149 crore for FY23 as compared to ₹5,635 crore (RE) in FY22.
Muruganandam said measures announced in the Budget such as Tamil Nadu Data Purity Project and reforming the Internal Audit system in the State are some of the key reform measures in the direction of addressing the leakages in the system.
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