GST mop-up below par in July too, ask rate goes up to Rs 1.19 lakh crore

By: |
Updated: August 2, 2019 7:05:59 AM

The overall goods and services tax (GST) collections in July came in at Rs 1.02 lakh crore, a bit higher than Rs 99,939 crore collected in June, but significantly lower than Rs 1.13 lakh crore garnered in April.

As the GST expanded the relevant tax base from just over 62 lakh to 1.23 crore, the GST collections in 2018-19 was short of the initial target (budget estimate) by Rs 1.6 lakh crore or a fifth.

The overall goods and services tax (GST) collections in July came in at Rs 1.02 lakh crore, a bit higher than Rs 99,939 crore collected in June, but significantly lower than Rs 1.13 lakh crore garnered in April. The average monthly GST receipts in the first four months of the fiscal year were Rs 1,04,044 crore, a good Rs 10,000 crore less than required to meet the Centre-state ‘target’ for FY20 (assuming the states get the same share as the Centre has budgeted for itself).

With the shortfall in the first four months of the fiscal, the monthly ask rate for the remaining period of the year has risen to over Rs 1.19 lakh crore, a difficult task for the Centre and state governments, which are together responsible for GST administration to perform.

In fact, the GST collections were below par last year as well. As the GST expanded the relevant tax base from just over 62 lakh to 1.23 crore, the GST collections in 2018-19 was short of the initial target (budget estimate) by Rs 1.6 lakh crore or a fifth. Though officials say benign tax rates (there have been series of rate cuts since the launch of the tax in July, 2017) are the main reason for the lower-than-expected collections, experts say absence of foolproof invoice-matching mechanism meant that tax evasion hasn’t been efficiently plugged.

The CAG has recently pointed out that the Centre’s revenue from taxes on goods and services subsumed in GST registered a 10% decline in 2017-18 compared to the previous year. So, the overall growth of indirect taxes collected by the Centre slowed from 21.3% in 2016-17 to 5.8% in 2017-18, the auditor noted (in 2018-19, growth was even lower at 2.9%).

“The system of payment and settlement of tax that was envisaged for GST was based on one hundred per cent invoice-matching and availment of input tax credit, as well as settlement of I-GST on the basis of invoice-matching. Neither is possible as of now, as an invoice-matching system has not kicked-in,” the top auditor said.

The July collection, however, rose by 5.8% over the same month last year. “During April-July 2019 vis-à-vis 2018, the domestic component has grown by 9.2% while the GST on imports has come down by 0.2% and the total collection has grown by 6.83%,” the government said in a statement. By way of compensation to states to meet their GST revenue collection target, Rs 17,789 crore was released April-May period.

The central GST stood at Rs 17,912 crore while state GST collection came in at Rs 25,008 crore in July. Integrated GST was Rs 50,612 crore which includes Rs 24,246 crore collected on imports and collection under compensation cess was Rs 8,551 crore (including Rs 797 crore collected on imports). The total number of GSTR 3B Returns filed for the month of June up to 31stJuly, 2019 is 75.79 lakh, the government said. It may be noted that IGST is a wash-out tax, and the proceeds get distributed between the Centre and states as CGST and SGST respectively.
End

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1No need to worry about food inflation for six months, says expert
2Covid-19 effect: Deloitte consumer survey shows change in spending pattern over last six weeks
3Need for growing NDB into global development institution: FM Nirmala Sitharaman