In what eased the concerns of a fiscal slippage ahead of the Union Budget, the government on Thursday reported that goods and services tax (GST) collections for December were Rs 86,703 crore and ticking, against a low of about Rs 81,000 crore garnered during the comparable period for November.
In what eased the concerns of a fiscal slippage ahead of the Union Budget, the government on Thursday reported that goods and services tax (GST) collections for December were Rs 86,703 crore and ticking, against a low of about Rs 81,000 crore garnered during the comparable period for November. Analysts said the latest figure probably reflected a tipping point for (improved) GST compliance by businesses and stabilisation of the revenue streams for the Centre. The GST collections had been on the decline since September (see table). That the higher December revenue was despite the month bearing the full impact of the rate cuts on over 200 items that took effect on November 15 bolstered the tax administrators’ confidence. December also saw businesses taking credit for pre-GST stocks as the deadline for these “transitional credits” ended on December 27. A series of anti-evasion measures being taken by the authorities, including the pan-India roll-out of the electronic way (e-way) Bill for transport of goods from February 1 and imposition of reverse charge levy on dealers paying nominal taxes under the composition-scheme, might increase compliance further. Policymakers believe that GST would eventually increase tax buoyancy and also lead to rise in direct tax collections.
Although no official figure is out on revenue-neutral monthly GST collection, indications are that collections of Rs 90,000-95,000 crore will, in the aggregate, suffice to avoid a deficit — of course, there could still be states that will report revenue shortfalls that need to be compensated by the Centre, but some others will have surpluses at that level of overall collections. The Centre is seen comfortable with monthly central GST proceeds of over Rs 45,000 crore. Due to inadequate collections and delays in disbursal of integrated GST revenue – of the floating IGST collections of Rs 1.25 lakh crore, Rs 35,000 crore has recently been released among the Centre and states as a temporary measure –, most states have received compensation from the Centre since the July roll-out of the comprehensive indirect tax. Pratik Jain, leader-indirect tax, PwC, said, “The increase in revenue collection is on expected lines and means that gradually GST is stabilising and the impact of transition issues is waning out.
This, coupled with a few anti-evasion measures being taken by the government now, is likely to result in further increase of revenues in January to March 2018 quarter.” The compliance level in terms of returns filed too has shown some improvement in December. Against 53 lakh taxpayers who had filed returns for November till the comparable time, 56.3 lakh units filed the returns for December till date. In earlier months, the corresponding numbers have hovered around 50 lakh. An improvement in compliance was also seen among composition scheme dealers, a section of which are seen to be grossly under-reporting their revenue and underpaying/evading tax. For the July-September quarter, over 8.1 lakh composition dealers filed returns and paid Rs 335 crore as taxes. In comparison, for the October-December quarter, 9.25 lakh returns were filed by the composition dealers with a tax payment of Rs 421.35 crore, the government said in a statement. So far, one crore taxpayers have registered under GST with 17.11 lakh registrants under the composition scheme. The scheme provides for a concessional tax rate and easier compliance like requirement of quarterly tax filing.
MS Mani, senior director at Deloitte India, said: “The increase in GST collections for December compared to November is a welcome sign. It appears that GST collections have started entering the stabilisation phase and are now expected to improve in the coming months.” He added that a combination of reasonable rates and easier compliance processes during December might also have contributed to the improvement in collections. In absence of tools to plug revenue leakages, the government has struggled to verify unusually high claims of transitional credit amounting to nearly Rs 90,000 crore. With the closing of transitional credit claim window and several anti-evasion measures like e-way Bill and reverse charge mechanism making a come back, the government expects a true picture of GST revenue to emerge in January.