GST to boost Uttar Pradesh's commercial tax kitty

A consumer state, UP will be a net tax gainer with several goods being imported from other states

Even as Union Finance Minister Arun Jaitley has tabled Goods and Services Tax (GST) bills in the Lok Sabha for rolling out the One Nation, One Tax regime from July 1, Uttar Pradesh is likely to be a major beneficiary under the new tax structure.

Even under the existing Value Added Tax (VAT) regime, implemented in UP on January 1, 2008, the state had its tax kitty burgeon although it was one of the last states to concede to VAT.

On Monday, Jaitley tabled four tax reform bills viz. Central GST, Integrated GST, Union Territory GST and the Compensation Law, which would collectively facilitate implementation of the unified and liberal indirect tax regime in India.

Since UP would be a net tax gainer as it is basically a consumer state with a plethora of goods being imported from other states. GST is primarily the destination-based taxation system as against manufacturing source based.

Under VAT, the state commercial tax revenue was likely to shoot up by 17 per cent to almost Rs 58,000 crore during the current financial year. (See table)

Nonetheless, the Centre would compensate the state for tax revenue losses under the GST regime below a threshold level.

Although, the successive governments in UP have been sanguine of the state tax coffers growing under GST, yet the compensation clause has always been a bone of contention. Now, with the Adityanath Yogi-led Bharatiya Janata Party (BJP) government ruling in the state, the state would understandably fall in line to support GST.

The state commercial tax department had already been holding consultative meetings with all stakeholders, including traders and tax experts to take their opinion on GST, while training programmes for tax officials were being organised to prepare them for the rollout.

Fiscal	2009-10	2010-11	2011-12	2012-13	2013-14	2014-15	2015-16	2016-17 (proj)
UP commercial tax revenue (Rs cr)	20,825	24,837	33,107	34,870	39,645	42,931	49,452	57,940
%age growth	18	19	33	5	14	8	15	17