Dharani, vehicles taxes key drivers for Telangana’s tax revenue surge, says RBI

Telangana is ranked second with its own tax revenue pegged at 84.2 percent of the overall tax revenue collected, next only to Haryana with 86.9 percent of the overall tax revenue

Hyderabad: The Reserve Bank of India (RBI), in its latest report on State finances, is all praise for the fiscal innovations and tax reforms of the Telangana government, terming the seamless Dharani portal and stricter vehicle taxes as key drivers for the State’s remarkable tax revenue surge. Telangana is ranked second with its own tax revenue pegged at 84.2 percent of the overall tax revenue collected, next only to Haryana with 86.9 percent of the overall tax revenue.

In its latest ‘State Finances – A Study of Budgets’ report, the apex bank was appreciative of tax reforms like the Dharani portal for speedy disposal of cases. The RBI felt that the revision of stamp duty rates on transactions like exchange of property, gift to members of family, construction agreements, partition and settlement cases and various sale agreements through Dharani portal have propelled tax revenues.

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The State government constituted a separate tax research unit to analyse sector wise variance, effective parameter for investigation/audit and tax evasion methodologies adopted by taxpayers. The State had introduced ‘My Bill- My Rights’ scheme to raise awareness among public to ask for bill for purchase of goods and services, the report said.

The RBI also acknowledged reform measures like increase in life tax on different categories of vehicles and strict enforcement by punishing vehicle tax defaulters with hefty penalties up to 200 percent for their effectiveness. It appreciated Telangana for its innovative reform of ‘e-auction of large parcels of land’ as part of its non-tax revenue reforms.

Due to these fiscal innovations and tax reforms, Telangana has been ranked second among the top States in the country in terms of State’s Own Tax Revenues (SOTR) as proportion of the overall tax revenue. The State’s own tax revenue is pegged at 84.2 percent of the overall tax revenue collected during the post Covid-19 era i.e. 2021-22 to 2022-23. Haryana secured top spot with own tax revenue constituting 86.9 percent of the overall tax revenue. This is compared to own tax revenue of less than 50 per cent in States like Bihar and Jharkhand.

According to the RBI report, Telangana was ranked fifth with the SOTR accounting for 76.4 percent of the overall tax revenue during pre-GST period of 2015-16 and 2016-17. Due to its innovative measures, the State secured third rank with the SOTR covering 79.5 percent of the overall tax revenue from 2018-19 and 2019-20 (Post-GST and Pre-Covid era).

The RBI report said there was general increase in the share of own tax revenues which helped States reduce their dependence on devolution from the Centre. The report stated that the gross fiscal deficit during the current year was estimated to be 4 percent and the primary deficit at 2.4 percent. The State’s outstanding liabilities as percentage of the GSDP in budget estimates of 2023-24 stood at 27.8 percent, one percentage more than 26.8 percent of the previous year.