GST revenue drops: Collections at Rs 94,726 crore in December
Economy News: GST
GST revenue drops: Collections at Rs 94,726 crore in December
We should also expect more enforcement and investigations cases in the next few months.”
The goods and services tax (GST) revenue for November (collected in December) dropped to Rs 94,726 crore from Rs 97,637 crore in the previous month, belying expectations that the mop-up might have entered a phase of a sustained upswing. The latest figures released by the finance ministry have made it almost clear that the Centre will report a major GST revenue deficit in this fiscal against its target.
States, despite the compensation guaranteed for any shortfall in their state GST (SGST) revenue, could also take a hit as lower revenue for the Centre would reduce tax devolution to states. The November revenue is even lower than the average (Rs 97,039 crore) in the first eight months of this fiscal.
Pratik Jain, partner, and leader-indirect tax, PwC India, said: “While the December collections are lesser than November and October (where it exceeded Rs 1 lakh crore), overall average collection for 2018-19 has shown marked improvement over 2017-18. This, coupled with decent growth in income tax collections, gives a clear indication that the tax base is expanding. Next few months may also see similar collections and the government may want to have a more realistic estimate of GST collection for next year.”
The revenue collections for August (collected in September), which was the first full month after GST rate cuts on 88 items became applicable on July 27, was nearly the same as in November. With the recent rate cuts on 23 more items coming into effect from Tuesday, the January GST revenue could slide further.
While the monthly gross (pre-devolution) GST revenue (excluding cess) for the Centre to meet its budget estimate is a little over Rs 54,000 crore, the total revenue earned by the Centre after regular and provision settlement of IGST in December was just Rs 43,851 crore. The Centre’s revenue after settlement in October (November taxes) was `48,954 crore and the average in the first nine months of this fiscal stands at Rs 39,094 crore.
Last week, finance minister Arun Jaitley admitted in his blog that the GST targets set for the states were ‘unprecedentedly high’ and so ‘almost unachievable’. “Thus, even when 18 months have not been finished since the launch of GST, on this day every state has a target of improving its revenue with three 14% increases compounded annually over the base year of 2015-16. This is close to a 50% being reached in the second year itself. It is almost an unachievable target. Yet, six states have already achieved it, another seven are within a striking distance of achieving it and only 18 are still more than 10% away from achieving it,” he said.
Jain said, “when the new compliance framework comes in from next year (pilot is expected from April 19) then the collections could improve again as there would be greater control over input credit claimed by businesses. We should also expect more enforcement and investigations cases in the next few months.”
While gross GST collections of a little over Rs 1 lakh crore per month are estimated to be what is required to wipe out a shortfall, the collections breached the threshold only twice since the tax’s July 2017 launch ·
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