Centre needs to intensify its tax mop-up measures, particularly on GST: Report

The Hindu- Business Line By KR Srivats February 04, 2019

Goldman Sachs Economics Research sees the revised estimates for the current fiscal and the targets for FY20 as “still ambitious”, requiring intensified tax collection efforts, particularly on GST.

The Narendra Modi-led government is betting big on a spurt in corporate tax and Customs duties collections besides reduction in the States’ share in the Centre’s taxes to make up for the nearly ?1-lakh crore GST shortfall, an analysis done by Goldman Sachs Economics Research showed. “The FY19 Revised Estimate assumes a significant pick up in tax collection efforts in the last quarter, and a full year growth of 20 per cent, in order to be able to increase direct taxes by ?50,000 crore relative to Budget Estimate. This may be possible to achieve following the strong performance last year, but nonetheless appears to be ambitious compared to historical averages,” the research note said.

The Centre expects to offset the ?1-lakh crore deficit in GST in three ways — an overshoot of direct taxes, particularly of corporate taxes (by ?50,000 crore); bump up in Customs revenues (?17,500 crore) and decline in share of States in gross tax revenues by about ?27,000 crore than what was budgeted.

Goldman Sachs Research is of the view that the GST shortfall estimation of ?1 lakh crore may be “conservative” — limiting the gap to ?1 lakh crore would require an average collection of ?76,800 crore a month during the last quarter of the fiscal year, compared to the run rate of ?45,500 crore so far.