Tax Commissioner flags: ‘GST revenue shrinks by 14% vis-à-vis VAT collection’

A day ago, the 15th Finance Commission had red-flagged Gujarat’s growth, saying that the continued momentum of the “impressive” growth of 12 per cent recorded by the state for the past 10 years “depends on exogenous uncertainties” like the GST. The Commission had pointed that as per the projections of the Gujarat government, the 14 per cent growth guaranteed for the first five years of the GST is likely to be sustained. When asked to comment on it, Vaghela, however, said, “After five years, it will become difficult for states like Gujarat. However, it has not affected Maharashtra.” Vaghela, who is a part of the GST implementation committee, also opposed the move to shift many items from the 28 per cent GST slab to 18 per cent slab.

“Only 31 commodities are left in the 28 per cent tax slab. There are some commodities which people might say should be taken from 28 per cent to 18per cent. But they should understand that in the pre-GST days, of the total revenue we (Gujarat) were getting, 70 per cent of the revenue came from these commodities. Just imagine what will happen to Gujarat,” he said, days after the GST Council approved reduction of tax of 88 consumer-centric products, including cosmetics, refrigerators, washing machines and small screen TVs. When GST was rolled out last year there were 226 items in the 28 per cent tax bracket.

Vaghela said that before the GST regime kicked in, people were paying 30.5 per cent tax for commodities that are currently in the 28 per cent tax slab.  “More than one year has passed and there are many criticisms. But within our heart we know that the GST has stabilised… You will be surprised to know that we have made 49 changes and 47 of them are trade-friendly,” the IAS officer added.