Gaining Ground: GST buoyancy stable despite rate cuts

By: |
Updated: March 2, 2019 4:49:27 AM

After regular settlement of integrated GST, the central and state GST collections stood at Rs 37,095 crore Rs 39,939 crore respectively in February.

 

After regular settlement of integrated GST, the central and state GST collections stood at Rs 37,095 crore Rs 39,939 crore respectively in February.

The goods and services tax (GST) collections seems to stabilise after several months of below-target growth. Despite the rate cuts on as many as 22 items including many key consumer goods that came into effect on the first day of the month, collections for January (reported in February) came in at `97,247 crore, as much as the monthly average for the first ten months of the fiscal. Of course, the January revenue was 5.4% lower than the mop-up for December (collected in January) that had breached the `1 lakh crore threshold.
The collection trend also signals that the revised target for the central GST collection for FY19 would be more than met. In the interim budget presented on February 1, the government revised down the estimate for central GST collection by `1 lakh crore. Assuming that state GST and CGST collections would be broadly same, the average monthly collection required to meet the Central GST target (RE) now is `95,861 crore.

Pratik Jain, partner, & leader-indirect tax at PwC India, said: “While the monthly collection is a tad lower than last month, it is more or less same as average monthly collection of 2018-19. We have seen that collection of over Rs 1 lakh crore in a month has typically come in last month of the quarter only, so a slight reduction doesn’t seem to be a cause for worry. The real question is how does the government achieve the next year’s target which is around 20% higher than the current fiscal, with little leg room to increase the rates. Tax evasion and leakages still seem to be a huge problem for the government.”

As reported by FE earlier, the states’ GST shortfall against the assured level of 14% annual growth has come down from 20% last year to 10% so far this fiscal. On December 22, the GST Council cur rates on 22 items, including six items that moved from 28% slab to 18% including monitors and TVs, power banks, digital cameras and video camera recorders, video game consoles and movie tickets. Recently, the council brought down the rates for under construction houses sharply, while doing away with the input tax credit for developers, in what is touted as a revenue-neutral move.

“The marginal drop in the February GST collections compared to January could be on account of the full-month effects of the earlier rate reductions. The government would now hope that the expansion of the tax base, which has been facilitated by having reasonable rates, would improve collections in the next fiscal,” MSMani, Partner, Deloitte India.

After regular settlement of integrated GST, the central and state GST collections stood at Rs 37,095 crore Rs 39,939 crore respectively in February. The total IGST collection was Rs 46,953 crore while Rs 8,476 crore was collected as cess, the government said in a statement. “The revenue in February, 2018 was Rs 85,962 crore and the revenue during February, 2019 is a growth of 13.12% over the revenue in the same month last year,” the government said. It added that the total number of GSTR 3B returns filed for the month of January up to 28th February was 73.48 lakh. Abhishek Jain, Tax Partner, EY said: “While the GST collections are in line with the average collection in this financial year, it has witnessed a slight dip vis-a-vis the previous month; a possible reason being the impact of rate rationalizations effective January.”

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Jet Airways chairman Naresh Goyal urges employees to bear with him in difficult situation
2Lenders seek clarifications on NBCC bid to takeover Jaypee Infratech
3Government appoints Hasmukh Adhia as chairman of Bank of Baroda