Analysts turn cautious on GST collections; what’s worrying them?

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Updated: March 28, 2018 9:33:43 AM

After the GST collections dipped in February to Rs 85,174 crore from Rs 86,318 crore a month earlier, analysts caution that the figures reported so far are way below projections which will negatively impact the fiscal situation.

GST, goods and service tax, nil tax liability, zero tax liability, GST returns, GST regime, tax returns, GST compliance, GSTR, GSTNEven as the tax collections come in lower than expected, Kotak Securities says that the GST monthly run-rate for FY18 was Rs 917 billion for FY18. (Image: PTI)

After the GST collections dipped in February to Rs 85,174 crore from Rs 86,318 crore a month earlier, analysts caution that the figures reported so far are way below projections which will negatively impact the fiscal situation. The Narendra Modi-led government has already raised the fiscal deficit target for the FY-19 to 3.3%, against the previous plan of limiting it to 3%. In conversation with FE Online, M S Mani, Partner, Deloitte India said that the reasons for non-filing of returns by over 2 million registered taxpayers would be an area of concern for the tax authorities. Further, he notes that while GST collections are now entering the stabilisation phase, the expected revenue garnering appears to be taking more time.

Even as the tax collections come in lower than expected, Kotak Securities says that the GST monthly run-rate for FY18 was Rs 917 billion for FY18. “Monthly run-rate of around Rs 1,000 crore and more will be required in FY19,” said the firm. As we come to the end of the financial year, Kotak notes that early buoyancy from compliance improvements is the key to achieve FY-19 estimates. Further, the firm is cautious on the fiscal situation until the GST rate picks up.

M S Mani noted that while the gradual increase in the percentage of GST return filers is encouraging, it is still quite low as it appears that 30% of taxpayers are not filing returns. Further, a report in Financial Express today quoted analysts saying that lower-than-expected GST revenue for the first two months of 2018 might force the government to hasten the introduction of anti-evasion measures such as invoice-matching and reverse charge on transactions with unregistered dealers, besides the e-way bill, which is slated to be rolled out from April 1.

A few analysts attributed the fall in collections to fewer working days in the month of February, leading to lower sales and lesser hence lower taxes. Notably, the collection are far below government’s estimates of average monthly collection of Rs 92,000 crore GST revenue every month.

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