As the goods and services tax (GST) collections for March (collected in April) came in at Rs 1,03,458 crore, compared with a monthly average of around Rs 90,000 crore in July-March, finance minister Arun Jaitley called it (collections exceeding Rs 1 lakh crore) “a landmark achievement and a confirmation of increased economic activity as brought out by other reports”.
As the goods and services tax (GST) collections for March (collected in April) came in at Rs 1,03,458 crore, compared with a monthly average of around Rs 90,000 crore in July-March, finance minister Arun Jaitley called it (collections exceeding Rs 1 lakh crore) “a landmark achievement and a confirmation of increased economic activity as brought out by other reports”. Tax experts noted that the record March mop-up could have seen some impact of “year end-push and adjustments”, but said that clearly, compliance was steadily improving.
Though the recent roll-out of the e-way bill, a key anti-evasion measure, may have boosted revenue and the invoice-matching mechanism, once implemented, could improve buoyancy further, few are willing to bet on the March collections setting a sustainable trend thenceforth. The collections could again revert to the pre-March level or thereabouts before showing a gradual acceleration, many feel. A government statement, too, acknowledged this.
An analysis by FE showed there still existed a rather wide gap of between the budget estimate for central GST (CGST) collections for 2018-19 and the actual CGST revenue garnered thus far. On a monthly basis, the difference is at least around Rs 4,300 crore or 9%.
The July-March 2018 CGST collections were Rs 2.08 lakh crore or Rs 23,111 crore per month. The integrated GST (IGST) collected during the period was Rs 1.77 lakh crore; assuming that half of this went to the CGST kitty, the average monthly GST collections for the Centre was about Rs 33,000 crore. However, the CGST revenue for 2018-19 could be even higher as unlike in the last financial year, the Centre won’t have to shell out huge amounts as transitional credits.
As CGST and state GST (SGST) revenue will be roughly equal in the absence of the transitional credit, the trend CGST revenue for the next financial year could be SGST collections plus half of IGST pool. And this works out to be Rs 46,000 crore a month, compared with Rs 50,325 crore budgeted for 2018-19.
Meanwhile, the government suspects massive under-reporting of income among composition-scheme taxpayers, who are required to file returns and pay taxes on a quarterly basis. In the January-March quarter, some 12 lakh businesses or nearly 60% of eligible composition-scheme assessees paid just Rs 579 crore as tax. This translates into average annual revenue of these businesses to be Rs 19.3 lakh, while firms under Rs 20 lakh are outside the GST net.
Pratik Jain, partner and leader, indirect tax at PwC India, said: “While the filing of 3B returns have improved and touched almost 70%, for composition dealers this continues to be less than 60%. With only Rs 579 crore coming from these dealers, the government might want to investigate it in detail.” Under the concessional scheme, firms can pay tax of 1% of their turnover, rather than item-wise GST rates.
“The buoyancy in the tax revenue of GST reflects the upswing in the economy and better compliance. However, it is usually noticed that in the last month of the financial year, people try to pay arrears of some of the previous months also and, therefore, this month’s revenue cannot be taken as trend for the future,” the government said in a statement.
The total gross GST revenue collected in April 2018 was Rs 1,03,458 crore, of which CGST was Rs 18,652 crore, SGST Rs 25,704 crore, IGST Rs 50,548 crore (including Rs 21,246 crore collected on imports) and cess Rs 8,554 crore, including Rs 702 crore collected on imports.