There was only one more occasion since GST’s April 2017 launch the collection for any month declined from the year-ago month — in August 2018.
After two months of contraction, GST revenue grew 6% in November 2019 (concerning mostly October transactions), to report the third-largest monthly mop-up of Rs 1.03 lakh crore since the tax’s launch in July 2017.
A pick-up in consumption during the festive season seems to have contributed to the increase in mop-up, rather than any incipient economic recovery.
November collections on domestic transactions witnessed a 12% rise while those on imports declined 13%. GST mop-up in October — concerning mostly September transactions — came in at Rs 95,380 crore, 5.29% lower than in the year-ago month. The September GST collections were just Rs 91,916 crore, a 19-month low and 2.7% lower than the year-ago month. There was only one more occasion since GST’s April 2017 launch the collection for any month declined from the year-ago month — in August 2018.
While the monthly average Central GST (CGST) revenue to reach the Budget estimate for FY20 is Rs 43,833 crore, the average monthly mop-up during April-November period has been Rs 41,181 crore per month. That is a shortfall of a little over of Rs 2,500 crore per month or some Rs 32,000 crore a year.
The state governments are also feeling the pinch of anaemic GST collections, both directly and indirectly. Their requirement of compensation is rising and while the compensation cess kitty is shrinking. In the April-November period, the average monthly compensation cess kitty was Rs 7,900 crore, which would mean a shortfall of over `1 lakh crore on an annualised basis. Of course, since some Rs 70,000 crore of IGST are being distributed among the states, the shortfall might be reduced to that extent. Further, any shortfall in the overall GST kitty will impact the transfers to the states from the divisible pool of taxes.
A tax official had told FE earlier that the likely cess receipts this year might be enough to bridge the states’ GST revenue shortfall only till December.
A clutch of Opposition-ruled states, namely West Bengal, Kerala, Punjab and Puducherry, have been vocal against the delays in release of compensation amounts to them.
“The GST Council must be convened at the earliest to discuss compensation payment dispute between the Centre and states. The Central government has defaulted on the payment. Law says that compensation must be paid in bimonthly instalments. Today, we enter the fourth month without payment,” Kerala finance minister Thomas Isaac tweeted on Sunday.
The BJP-ruled states also privately acknowledge the problem of GST compensation not reaching them in time.
“Of gross Rs 1,03,492 crore in November, CGST is Rs 19,592 crore, SGST is Rs 27,144 crore, IGST is Rs 49,028 crore (including Rs 20,948 crore collected on imports) and cess is Rs 7,727 crore (including Rs 869 crore collected on imports),” the government said on Sunday.
It further said the November 2019 collection is the third-highest monthly collection since the introduction of GST, next only to April 2019 and March 2019 collections. This is the eighth time since the inception of GST in July 2017 that the monthly collection has crossed the mark of Rs 1 lakh crore.
The total number of GSTR 3B returns filed for the month of October up to November 30, 2019 is 77.83 lakh, it said.
The government has settled Rs 25,150 crore to CGST and Rs 17,431 crore to SGST from IGST as regular settlement. The total revenue earned by the Central government and the state governments after regular settlement in the month of November is Rs 44,742 crore for CGST and Rs 44,576 crore for the SGST.