Odisha has achieved a positive average annual growth rate in goods and service tax (GST) collection without any GST compensation in the post-GST period, as per the findings of a recent paper, ‘Revenue Implications of GST on Indian State Finances,’ by Prof Sacchidananda Mukherjee of the New Delhi-based think-tank National Institute of Public Finance and Policy (NIPFP).
When GST came into force in 2017, the Centre had assured states of compensation for any revenue loss incurred by them from the date of GST for a period of five years. “Analysis of GST collections of 18 major states shows that on average states collected 88.3 per cent of Revenue Under Protection (RUP) or aggregate projected revenue of states in GST in 2018-19. In 2019-20, on average SGST collection, including IGST settlement, could meet only 76 per cent of the RUP and it dropped to 61 per cent in 2020-21,” the paper says.
In 2019-20, with GST compensation, states achieved on average 93 per cent of RUP. Due to a shortfall in GST compensation and cess collection in 2020-21, states could achieve 78.7 per cent of RUP. However, the paper says that in 2020-21 states also received GST compensation in terms of back-to-back loans from the Union government in lieu of a shortfall in GST compensation cess collection and this helped states to achieve an average of 91.6 per cent of RUP in 2020-21.
