HYDERABAD: The commercial tax department recorded an overall growth driven by IGST settlements. These taxes are from establishments, which are exempt such as the GST like hospitals, power companies, education among others.
SGST and IGST revenues normally register the same level of growth. But owing to the focussed approach of the state department, IGST rose by 32 per cent while SGST grew by just nine per cent.
Beginning from April, the state had consistently recorded a rise in IGST collections by way of settlement. In April, it jumped by 4 per cent, May two per cent, June 10 per cent, July 13 per cent, August 10 per cent, September 12 per cent and October seven percent.
IGST is a destination tax that is collected in the state where the goods or service is consumed. In this process the origin state will lose tax revenue while the destination state will get it.
When the goods move from one state to another, tax also moves from one state to another. In the origin state the person importing will adjust the input tax credit of IGST against his local liability. This process of adjustment will enable centrally-located GSTIN to transfer the amount directly to the state treasury by way of IGST settlement.
Another mode of getting IGST settlement to the destination state is that such an importing person should declare in his return that he no longer requires the input tax credit of IGST and reverses it in his monthly tax returns. This reversal is registered in the IGST software and the destination state will benefit from this by way of transfer of funds to the treasury of such state.
The recent reversals were from firms that have their IGST returns lying in their GSTIN account and had remained there. They are to be settled every month but due to lack of a drive had failed to come into the coffers of the department.
This has increased the overall GST revenue of the state by 18 percent to Rs 3,703.28 crore from Rs 3,143.28 crore in the corresponding month last year. This is an increase of Rs 559.50 crore. The drive was taken up by commissioner S.A.M. Rizvi.
With this avenue exhausted, it has to be seen what other measures the department is going to undertake to sustain the increase in the revenue. The state recorded a total GST collection of Rs 6,248 crore in November. The increase in GST revenue for the state up to November is nine per cent, miles away from the target of 20 per cent.
