Despite a one-percentage point cut in the central sales tax (CST) rate in June 2008 and the global economic slowdown following soon after, the CST collections have gone up in some northern states.

States like Haryana, Punjab and Uttarakhand have seen growth in CST collection till December 2008 over the same period last year.

Data collected by FE from the excise and taxation departments of the three states reveals that CST collection in Uttarakhand till December 2008 was Rs 110.75 crore, up 16.8% over the same period in the previous year.

Similarly, the CST collections in Haryana till December 2008 stood at Rs 40.87 crore, up 12.1% compared to the same period in the previous year.

While separate data for VAT and CST for Punjab was not available immediately, it was learnt that total revenue collection up to December 2008 was up 37.5%. While the total tax collection in Punjab for 2006-07 stood at Rs 5,136 crore, it touched Rs 5,871 crore in 2007-08, and is expected to reach Rs 7,100 crore in 2008-09.

RD Dhiman, commissioner of excise and taxation, told FE that Himachal Pradesh, which switched to the VAT regime in 2006-07 and charged 12.5% VAT on 111 items, showed 15% growth in overall revenue collection till December 2008. The major tax spinners for the state were petrol and diesel, liquor, steel mills and pharmaceutical units .

It is learnt that the empowered committee is finalising the Goods and Service Tax (GST) regime and the states of Punjab, Haryana, Uttarakhand, Himachal Pradesh have opposed the merger of purchase tax with GST.

The states hold that internationally, GST is based on supplies of goods and services, rather than on manufacture and sales, and same model should be followed back home.

These states have also demanded that the CST should not be reduced from 2% to 1% as that would entail huge losses for the states. The state governments of Punjab, Haryana and Uttarakhand have requested the Centre for additional funds and for the relaxation of borrowing ceilings for the current fiscal under the Fiscal Responsibility and Budget Management Act (FRBM) of 2003.

Punjab, for example, have had to resort to heavy market borrowings to fund the development process leading to outstandings of Rs 48,344 crore in the last fiscal and interest outgo of more than Rs 4,000 crore per annum.

Punjab and Haryana agree on the issue of increase in the state share in the gross proceeds of central taxes from 30.5% to at least 50%.

As the revenue component of state Plan outlays had crossed 50% compared with 30% prescribed earlier by the Plan panel, there was need to revise the ratio of central assistance from 70% loan and 30% grant to 50:50, thus lessening the burden on states.

More goes into govt coffer

• CST collections in Haryana stood at Rs 40.87 crore till December 2008, up 12.1% compared to the same period in the previous year

• CST collection in Uttarakhand till December 2008 was Rs 110.75 crore, up 16.8% over the same period in the previous year

• Total revenue collection in Punjab till December 2008 was up 37.5%. While the total tax collection in Punjab for 2006-07 stood at Rs 5,136 crore, it touched Rs 5,871 crore in 2007-08, and is expected to reach Rs 7,100 crore in 2008-09