The November goods and services tax (GST) collections declined to Rs 80,808 crore, down from around Rs 83,350 crore revenue collected in October. The GST tax collections for November are much lower than a comparable monthly average of close to Rs 92,000 crore in the July-September period. The fall in GST collections for the last month pose likely worries on the fiscal implications of the upcoming union budget. As the Centre’s collections are a little less than half of the overall GST collections, it will be secured if the overall GST revenue is a little over Rs 90,000 crore. For now, the collections in October and November have fallen short of that figure. It will definitely increase government’s fiscal concerns ahead of the upcoming budget.
Likely reasons for fall in November GST collections:
1) As per the experts, the latest dip can be attributed to the GST rate cuts for nearly 200 items on November 15.
2)Even the use of the integrated GST (IGST) as credit for paying taxes is a likely reason.
3) However, a fall in compliance needs also to be suspected given that among the nearly 1 crore GST Network registrants, only 53 lakh had paid November taxes when last reported. Even after excluding 17 lakh units that opted for the nominal-tax scheme, which allows quarterly tax payments, at least 20 lakh haven’t paid November taxes so far. In no month since GST’s launch has the taxpayer count exceeded 60 lakh, writes Financial Express correspondent Sumit Jha.
Still not much of a worry
However, it’s too early to say that the recent fall in GST collections for November will cause sleepless nights to the government. A certain section of market experts is of the belief that the plunge is on expected lines as the rates of an over 175 items were reduced and refunds only started recently. The collections should see a rise from January onwards, as per them. Pratik Jain, leader, indirect tax, PwC India, told Financial Express: “Even for December, there could be an impact of opening credit claim (on GST collections) for which the last date is December 27. From January onwards, the collections should stabilise.”
Given the fact that direct tax collections are witnessing a sequential drop and private investments and private consumption are sluggish, meeting the fiscal deficit target of 3.2% of GDP becomes a hard task. However, it will be too early to pass any judgement.