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Major GST reforms likely this fiscal: Ajay Bhushan Pandey, Finance Secretary

Major GST reforms likely this fiscal: Ajay Bhushan Pandey, Finance Secretary

Even as the GST regime entered the fourth year on July 1, it is encountering the issue of low revenue growth and the resultant inability of the central government to fully compensate the states for their ‘revenue shortfall’ versus the constitutionally guaranteed annual growth of 14%. FE’s Sumit Jha spoke with finance secretary Ajay Bhushan Pandey on the reforms being undertaken to remedy the situation.

GST collection in June is close to Rs 91,000 crore, about 9% less than the year-ago month. What proportion of the revenue is from taxes paid for transactions during May?
We are performing that exercise to find out from the available data but my guesstimate is that 70-80% of June collection would have come from transactions in May.

Lower-than-estimated collections have made it difficult to fully compensate the states for their revenue shortfall. What is the solution to this issue?
Last year (FY20), nominal GDP growth was around 7.5% but the domestic GST collection, leaving aside the import part as GDP growth can be compared only with tax growth from domestic consumption, was around 9%. Hence, the notion that lack of GST revenue growth is the sole reason for the compensation issue is not correct.

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