Union Budget 2019: A pick up or stabilisation in the GST collections will “depend upon overall growth in the economy".
Union Budget 2019 India: The Goods and Services Tax or GST has completed two years now. While the GST collection for June dipped to a tad below Rs 1 lakh crore, this was for the first time that the collection has fallen below this mark in the current fiscal year 2019-20. In a pre-Budget 2019 survey conducted by Financial Express Online, some top economists and experts shared their views on whether GST collections will pick up and stabilise in the coming months or not.
Out of the 15 respondents that Financial Express Online reached out to, one-third couldn’t say whether or not GST collections will pick up and stabilise in the coming months, because of the various situations on which GST collections depend. On the other hand, almost half of the respondents replied in the affirmative, reposing hope that government’s collection of GST will stabilise and even pick up in the coming months.
Watch out for these speed bumps
A pick up or stabilisation in the GST collections will “depend upon overall growth in the economy”, Anita Gandhi, Whole Time Director at Arihant Capital Markets, said. Meanwhile, according to EY, GST collection will stabilise but not necessarily pick up, since the compliance burden is high. “There is a need for more uniform rates, right now the rates are high and differentiated,” DK Srivastava, Chief Policy Advisor at EY, said. Also, L&T Finance Holdings’ Group Chief Economist Rupa Rege-Nitsure thinks that “because economic slowdown is quite acute, it will in turn, impact indirect tax collections like GST”. CARE Ratings’ Chief Economist Madan Sabanavis and Motilal Oswal Financial Services’ Chief Economist Nikhil Gupta also agreed.
On the contrary, a large NBFC, on the condition of anonymity, said that it expects a stabilisation in GST collections in the coming months and also sees it picking up because “the Taxpayers now understand the system and are likely to be more compliant”. CII’s Chief Economist Bidisha Ganguly said that GST collections have already “picked up in April and May and they should stabilise at these levels.” Further, “pick-up can be expected once more items are included in the GST basket such as fuels,” Ganguly further said.
Not just stabilise, but spike
Also, six other participants believed that GST collections will spike. Just like CII, Edelweiss also said that GST collections have already improved and they should move up and the government is focusing on that. However, “It is a journey, won’t happen overnight,” Sandeep Raina, Associate Director, Edelweiss Research, added. According to Grant Thornton’s National Tax Leader Vikas Vasal, GST collections should go up “as things stabilise and government links up direct tax and GST databases, and with increased use of data analytics”. Further, collections would improve over a longer time frame, said Sachchidanand Shukla, Chief Economist, Mahindra Group. “This is a multi-year story; it will take 12-18 months to play out,” Shukla said.
According to PwC, the system will progressively stabilise. “More and more data as well as segments of the economy coming into the system will also make the detection of evasion easier. These admin efficiencies are likely to lead to increasing trend of collections,” Ranen Banerjee, Partner and Leader Public Finance and Economist, PwC, said. Among other participants, Radhika Rao, Sr VP and Economist at DBS Bank, and Vivek Kumar, Senior Economist at Yes Bank also expect GST collections to improve and stabilise.
Running out of fuel
Only two of the 15 respondents replied in negative. Sharekhan told Financial Express Online that “given the current slowdown in the economy, we do not foresee a major pick up in GST collections in the short term.” Dun and Bradstreet also said ‘No’ to the question whether GST collection will stabilise and pick up.