The Tamil Nadu government received Rs 632 crore as compensation from Centre under the new Goods and Services Tax (GST) regime. The compensation is for the period July to October last year.
While the state received a compensation of Rs 530 crore for the first two months, – July and August – it received just Rs 102 crore in the subsequent two months. Lower compensation from the Centre for a month means the state, on its own, had generated higher GST.
“As for Tamil Nadu, in the first two months of GST implementation, there were not many festivals due to which the sales were low across the state. Tax revenue was also less and there was a shortfall under GST. Due to this, we received Rs 530 crore for the two months as compensation,” said a senior official in the commercial tax department.
The Centre and States had agreed to compensate loss incurred by the manufacturing States at the time of implementing GST based on the 2015-16 comparative revenue. The Centre has to compensate whatever shortfall is experienced in GST collection.
But in the subsequent two months, the tax revenue in Tamil Nadu was better and the shortfall was less. “The trends just before Deepavali showed a good increase in tax revenue and this continued till October end,” he said.
Being a manufacturing state, there were doubts whether Tamil Nadu would be able to collect the same revenue under GST as VAT. But compared to some northern states, TN has done well in tax collection under the GST regime. It also shows that TN is a big consuming state.
