GST collection in the month of September remained way below target at Rs 91,916 crores. For the second consecutive month, the GST collection in September remained below target.
GST collection in the month of September remained way below target at Rs 91,916 crores. For the second consecutive month, the GST collection in September remained below target. As the country’s fiscal deficit touched Rs 5.54 lakh crore at the end of August, which was 78.7 per cent of the Budget Estimate for 2019-20, and direct tax collection is also subdued, the fall in GST collection will enhance pressure on the government’s annual revenue collection, which may also make it difficult for the government to carry out necessary capital expenditure.
Out of Rs 91,916 crores of GST collection, CGST is Rs 16,630 crores, SGST is Rs 22,598 crores, IGST is Rs 45,069 crores and Cess is Rs 7,620 crore. The revenue during September 2019 has declined by 2.67 per cent in comparison to the revenue during September 2018. During April-September, 2019 the GST on imports has shown negative growth and the total collection has grown by 4.9 per cent.
Meanwhile, the government has also settled Rs 21,131 crores to CGST and Rs 15,121 crore to SGST from IGST as a regular settlement in September. The total revenue earned by the Central Government and the State Governments after regular settlement in the month of September 2019 is Rs 37,761 crore for CGST and Rs 37,719 crore for the SGST.
“The YoY decline in the headline GST collections in the month of September 2019 and the sub 5% growth in H1 FY2020, have reinforced concerns regarding impending shortfalls in the Government of India’s indirect tax collections relative to the budgeted target for FY2020. This is a risk not only for the Central Government’s fiscal situation but also for the State Governments, which receive 42% of shareable central taxes as central tax devolution,” said Aditi Nayar, Prinipal Economist, ICRA.
Lower-than-budgeted GST collections would likely reduce the central taxes devolved to the states in FY2020, which may necessitate expenditure cutbacks at the state government level, she added.
Amid low revenue collection from direct and indirect taxes, the government has let go of its revenue of around Rs 1.45 lakh crore by announcing cuts in corporate tax, aimed at boosting the faltering economy. Similarly, the government has presented many other measures like recapitalisation of PSU banks and additional liquidity support to Home Finance Companies (HFCs), which would increase the burden to restrict the fiscal deficit within the target.