Kerala's Goods and Service Tax (GST) revenue during October hit Rs 18.56 billion as against Rs 11.7 billion during September owing to various reasons including efforts to curb leakage of revenue by posting officials at the boarders to check e-way bills.
Expecting around 20 per cent growth rate in tax revenue per month once the GST is implemented, the state has so far only received 8.75 per cent growth rate and is hopeful that proper implementation of the system could bring in full benefits of the new tax regime, State Finance Minister Thomas Isaac said.
Commenting on the growth of GST revenue during October, he clarified that it was compared to September, during when the GST revenue was at the lowest of Rs 11.77 billion owing to the heavy flood which has affected the State during August.
However, the GST revenue in October was the highest the State has received after the tax regime was implemented, and is almost 18.75 per cent higher than the GST revenue of Rs 15.63 billion posted during the previous year, he explained in his social media post.
This year so far the growth has been around 8.75 per cent, which is against the calculations that the tax revenue after GST will be growing at 20 per cent month on month. The returns essentially needed to curb leakage in the GST regime is still not available.
"The growth in October gives us hope that our tax revenue will significantly improve is GST is completely implemented," he opined in his Facebook post.
He elaborated that the State GST component is about Rs 6-7 billion while the second component of IGST, from the sales of goods brought in from other States into Kerala, is the major one which has to bring in revenue to the State.
Almost 70 per cent of the State's consumption is goods from other States and the tax revenue from this has to be at least double of what the SGST is. However, IGST is currently around 7-9 billion, which shows that there is a leakage of around Rs 5-7 billion.
While e-way bills have been implemented four months back to curb the leakage in inter-state sales, there is no mechanism at present to monitor whether the goods moved from one State to the other has e-way bill.
Such a mechanism is not expected to be implemented in near future. Since there are no check posts, the State also cannot stop all the vehicles and check the e-way bill.
From August, the State government has assigned around 400 officials in different squads in major roads in the border to check e-way bills randomly in around five per cent of the vehicles.
"This has helped to reduce the tax leakage. Probably this is the reason why the IGST also showed a record growth of Rs 10.68 billion," he said. Measures taken to implement one per cent tax at source in the e-marketing sector also has helped to block tax evasion.
However, he added that whether the growth in tax revenue during October is a one-off phenomenon or a permanent one would be known only in the next two to three month's experience.