Concerns Arise Over Bengal's Government Projection for SGST Revenue in 2025-26
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Synopsis
Economists in West Bengal have raised concerns regarding the state government's predictions for SGST collections in 2025-26, citing previous shortfalls and questioning the feasibility of achieving higher revenue amidst changing economic conditions.
Key Takeaways
- Economists doubt government SGST revenue predictions.
- 2024-25 SGST collection was Rs 45,872.52 crore.
- Ambitious 2025-26 target set at Rs 49,771.98 crore.
- Market demand expected to rise due to tax changes.
- Repo rate cut may boost consumer spending.
Kolkata, Feb 15 (NationPress) Economists in West Bengal have expressed skepticism regarding the state government’s claims of achieving a higher collection from state goods and services tax (SGST) in the upcoming financial year of 2025-26, despite experiencing a shortfall in collections under the same category for 2024-25.
According to the revised estimates for 2024-25, the collection from SGST for West Bengal was Rs 45,872.52 crore, which falls short of the targeted Rs 47,336.55 crore set in the budget for that fiscal year.
Despite this shortfall, the state government has set a more ambitious collection target for SGST in the budget estimates for 2025-26 at Rs 49,771.98 crore.
Economists indicate that the only reasonable justification for this optimistic SGST projection is the government's expectation of increased market demand for goods and services, spurred by proposals in the recent Union budget to raise the minimum tax slab from Rs 7 lakh to Rs 12 lakh, alongside a Rs 75,000 standard deduction for salaried taxpayers.
In comparison to the revised SGST collection figures for 2024-25, the West Bengal government anticipates an 8.5 percent growth in the budget estimates for the upcoming fiscal year.
Additionally, economists argue that the Reserve Bank of India's recent announcement of a 25 basis point cut in the repo rate, which lowers interest rates on loans including housing, will motivate middle-class individuals to secure loans for purchasing various products, such as four-wheelers, further enhancing market demand.
They contend that these two developments—an increase in minimum tax slabs and a cut in repo rates—are likely to redirect the middle-class focus from goods and services subjected to lower GST to those that attract higher GST.
