Marginal contribution of non-tax revenue

At a time when revenue mobilisation has seen shortfall, a study revealed that the government has never focused on non-tax revenue.
The study ‘Trend and Structure of Non-Tax Revenue,’ conducted by Revenue Administration Training Centre stated that the government’s lack of focus and strategy has discouraged growth rate of non-tax revenue, which, if properly focused could contribute more to the government coffer.
In the last one decade non-tax revenue’s contribution to the total gross domestic product (GDP) stands between 2.14 per cent to 2.69 per cent, whereas the contribution of total revenue to the total GDP stands at 15 per cent.
However, non-tax revenue’s average contribution to the total revenue comes between 16 per cent and 22 per cent contributing to less than a quarter.
For a strong revenue administration it’s a challenge as contribution of non-tax revenue should be more in the total revenue.
“Going through the last 10 years revenue trend, some years it has been observed that non-tax revenue’s growth rate was registered negative as well,” said senior instructor at the Revenue Administration Training Centre Basu Sharma.
The study that took three months to complete also revealed that the contribution of non-tax revenue to the total revenue has seen fluctuation due to lack of revenue administration’s lack of focus and over concentration on tax revenue.
“The government has to focus more on non-tax revenue,” he said, adding that a long-term strategy has to be developed for the growth of non-tax revenue.
Fines, penalties, service fees, judicial fees, registration fee comes under non-tax revenue as the revenue is categorised into tax and non-tax revenue.
Value Added Tax (VAT), customs, excise and income tax come under tax revenue.
The VAT is the largest contributor in the revenue followed by income tax in the current fiscal year, according to the Finance Ministry.


Contribution of non-tax revenue in total revenue
2006-07 – 17.6 per cent
2007-08 – 19.8 per cent
2008-09 – 17 per cent
2009-10 – 14 per cent