The 14-day Covid-19 induced lockdown in Karnataka likely to impact 40 percent of the state's tax collections.

The state has a healthy collection of over 1.24 lakh crore comprising mainly GST/commercial taxes - ₹76,473 crore,Excise (liquor) - ₹24,580 crore, Stamps and Registration (property sales) - ₹12,655 crore, Transport (motor vehicle sales) - ₹7,515 crore and others-₹2,979 crore.

“About 40 percent of state’s own tax collections is likely to get impacted especially from GST/commercial taxes which is likely to see a major dip during the lockdown,” B T Manohar, member, Karnataka State GST Advisory Council, told Business Line.

‘Lockdown timings to blame’

“ I attribute the impact on tax collection to the lockdown relaxation timings ie 6 am to 10 am. Here, I see no major revenues coming to the state exchequer. And only relaxation allowed is for food-related commodities or sale of essential goods.”

Another major collection source, under the GST/commercial taxes is the factory or industrial output. “Here again, I don’t see tax mobilisation at all. Reason being that the industries are to function with 50 percent of its labour force and production gets impacted. Whatever the factory or industry produces has no sale time,” Manohar said.

Saving grace

The saving grace during lockdown for the state government may be through tax collection via Excise (liquor) sales. Manohar said “Since liquor in takeaway mode is allowed, the state gets collection through state excise tax, but sales at restaurants and bars have been impacted. This may see the tax collection affecting the state’s revenue.”

Revenues from Stamps and Registration are likely to get impacted as this has been classified as non-essential. Manohar said that the only plus point is that construction activity has been allowed or spared from lockdown measures. “Revenue collection from the transport (motor vehicle registrations) sector are too affected due to non-essential classification,” he added.

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