Covid shock: Tax revenue estimate slashed by 33.5%

In 2020-21, the budget estimate for tax revenue was ₹44,100 crore, which has now been revised to ₹29,300 crore.

The Delhi government on Tuesday pegged the revised estimate (RE) of tax revenue for fiscal 2020-21 at ₹29,300 crore, down from a budget estimate (BE) of ₹44,100 crore. The government attributed the estimated loss in tax collection to the Covid-19 pandemic.

Sisodia, who tabled the Delhi Budget in the assembly on Tuesday, said tax collections were severely hit by the Covid-19 pandemic in 2020-21 — by an estimated 40% of the budget estimate till January 2021. ( Praful Gangurde / Hindustan Times)

For the upcoming fiscal, the government has pegged tax revenue at ₹43,000 crore (BE), on the hopes that the economy will recover soon. Finance minister Manish Sisodia said the government is working on a multi-pronged strategy to ensure optimum tax collection the coming fiscal and that involves improving GST collections, scaling up excise revenue through a new policy and boosting real estate sales.

Sisodia, who tabled the Delhi Budget in the assembly on Tuesday, said tax collections were severely hit by the Covid-19 pandemic in 2020-21 — by an estimated 40% of the budget estimate till January 2021.

In 2020-21, the budget estimate for tax revenue was ₹44,100 crore, which has now been revised to ₹29,300 crore.

“This is an extreme revision,” said a senior government official who did not wish to be identified. For instance, the BE for tax revenue for 2019-20 was ₹42,500 crore and the RE was ₹39,550 crore.

The actual tax revenue figures for 2020-21 would reflect in the 2022-23 budget.

The break-up of the budget tax revenue of ₹43,000 crore for 2021-22, showed a share of ₹6,000 crore from state excise, ₹5,000 crore from stamp duty, registration fee on properties and land revenue tax, ₹2,000 crore from motor vehicles, and ₹30,000 crore for state goods and services tax (GST) and value-added tax (VAT) taken together.

In 2020-21, budget estimates of tax revenue through state excise was ₹6,300 crore, stamp duty and registry was ₹5,297 crore, motor vehicle tax was ₹2,500 crore and GST along with VAT was ₹30,000 crore.

Sisodia said the government will work on a multi-pronged strategy to increase revenue.

“We shall use data analytics and business intelligence to prevent any possible leakages in taxes this year. We have commissioned a study on improved GST implementation. We have started keeping an eye on the commercial vehicles going in and out of Delhi through RFID (radio frequency identification) and have initiated a dialogue through SMS with businesspersons on tax issues,” the deputy chief minister said.

Sisodia further said, “Comprehensive changes are being made to the excise policy to improve the collection of taxes. This will include preventing the sale of non-duty paid liquor (smuggled from other states) and various new changes to bring liquor shopping in Delhi up to international standards. To come out of extraordinary circumstances, we often need to take extraordinary measures.”