2 days ago
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Tamil Nadu, which clocked 10.83% economical maturation complaint successful existent presumption for 2025-26, has, however, registered lone a humble maturation rate with respect to the State’s Own Tax Revenue (SOTR).
Based connected unaudited provisional figures enactment retired by the bureau of the Principal Accountant General (Accounts and Entitlements), Tamil Nadu, the maturation complaint worked retired for SOTR successful 2025-26 vis-à-vis 2024-25 was 6.8%. In implicit terms, the gross went up to about ₹1.92 lakh crore from ₹1.80 lakh crore.
As for SOTR, determination are 2 wide components – the State Goods and Services Tax (SGST) and Taxes connected Sales & Trade. In respect of the SGST, the collections increased to ₹72,008.47 crore for 2025-26 from ₹70,886.77 crore for 2024-25, marking a emergence of lone 1.6%. For the erstwhile year, the State authorities scaled down the collections of SGST to astir ₹79,449 crore from ₹93,620 crore, pursuing the rationalisation of GST rates.
In fact, successful February, past Finance Minister Thangam Thennarasu, in his interim Budget speech, observed that the GST rate rationalisation was approved by the GST Council without considering the apprehensions and absorption recorded by respective States. He had anticipated a gross shortfall of around ₹9,600 crore for 2025-26.
As for the full gross receipts, the fig roseate to ₹2.91 lakh crore from ₹2.83 lakh crore, showing a emergence of astir 3%. During 2024-25 too, the complaint of summation successful SOTR did not bespeak the economical maturation rate. The State had recorded a double-digit economical maturation of 11.19% but the maturation complaint of SOTR was lone 7.74%.
Ordinarily, higher economic maturation complaint paves the way for tax buoyancy. However, a veteran policymaker points retired that determination whitethorn not beryllium overmuch reflection connected taxation collections erstwhile economical maturation is driven by exports or not broad-based.
GST rationalisation
But successful the lawsuit of Tamil Nadu, 2 reasons are attributed – rate rationalisation of the Goods and Services Tax which came into effect successful September past twelvemonth and the below-par compliance of the GST among traders. As for the archetypal reason, an economist says that initially, States specified arsenic Tamil Nadu endure erosion successful taxation gross collections but, erstwhile depletion picks up, they will benefit.
As for the second, the compliance facet was not fixed overmuch value due to the fact that the State was keen connected getting compensation. Due to a operation of factors, it was good known by 2022 – 5 years aft the launch of the GST – that over 3.25 lakh, representing around 30% of the registered dealers, had not paid a azygous rupee towards the tax. Besides, astir 1.94 lakh dealers had paid little than ₹1,000 in 2021-22 [as of February 28 this year, the spot of normal taxpayers was 11.4 lakh].
In the past 4 years, the authorities person not declared that the occupation of mediocre taxation compliance has been resolved erstwhile and for all, adjacent though determination person been reports of improved payer compliance. Unless loopholes successful this respect are plugged, determination volition not beryllium overmuch betterment successful taxation collection, the policymaker says. He besides points to instances of “willful” hikes successful appraisal rates that were aboriginal rectified. Tackling this contented should beryllium a apical precedence for the contiguous government, helium adds.
