FY19 closes on a happy note with record GST collections at Rs 1.06 trillion
The financial year 2018-19 (FY19) ended on a happy note on the goods and services tax (GST) front. At Rs 1.06 trillion, the government has announced the highest monthly collection from GST in March since its roll-out 21 months ago.
This is the fourth time in FY19 that the monthly GST collection has crossed the Rs 1-trillion mark, meeting the target.
With this, the total GST collected during the year has touched Rs 11.77 trillion, still nearly Rs 75,000 crore short of the initial annual expectation.
Even so, the GST mop-up, together with the direct tax collection of Rs 11.5 trillion (against a Budget target of Rs 12 trillion), may somewhat ease the government’s worry about a steep tax shortfall for now. Analysts said the latest numbers would help the government move closer to the fiscal deficit target of 3.4 per cent of the country’s gross domestic product (GDP) set for FY19.
“The monthly average of GST revenue during FY19 is Rs 98,114 crore, which is 9.2 per cent higher than 2017-18. These figures indicate that the revenue growth has been picking up in recent months, despite various rate rationalisation measures,” the finance ministry said in a statement on Monday.
The total GST collections in March were up 16 per cent from the corresponding period last year. Of that, the central GST (CGST) stood at Rs 20,353 crore, while state GST (SGST), and integrated GST (IGST) were pegged at Rs 27,520 crore and Rs 50,418 crore, respectively.
“The major reasons for the growth could be reconciliations by businesses of outward and inward supplies, intelligent data analytics, related tax leakage detections, and consequent GST payment by businesses,” said Abhishek Jain, tax partner, EY.
The CGST for the financial year adds up to Rs 4.6 trillion, against the revised target of Rs 5.04 trillion, leading to a shortfall of nearly Rs 45,000 crore. However, the amount collected as GST compensation cess which is left unutilised and is yet to be distributed to states is likely to be adequate enough to meet the shortfall, finance ministry officials said. This amount, they said, has helped the central government meet its revised GST target. The compensation cess is distributed among the states every two months, beginning May. The unutilised cess stands at around Rs 40,000 crore for the fiscal, and is likely to be accounted in the Centre’s books for now, only to be shared with states later.
The Interim Budget had earmarked Rs 51,735 crore for the compensation cess fund. Adding Rs 15,000 crore accrued from the previous fiscal year, the transfer to states translates to Rs 66,735 crore in FY19. That leaves a balance of Rs 38,625 crore in the cess account, according to this calculation. The government amended the GST Act last fiscal, allowing 50 per cent of the unutilised compensation amount to be transferred to the consolidated fund at any time in any year till the end of the five-year period, when the fund lapses.
“The GST collection figure looks optimistic but there are reports that payments have been made in cash without utilising credits and this could be one important factor. An analysis of the pending refunds should be done to highlight the overall number. Notwithstanding this, the number looks good due to better compliance and various quarterly tax payments”, said Abhishek A Rastogi, partner at Khaitan & Co. The GST Council in December decided to cut tax rates on 23 goods and services, including movie tickets, television and monitor screens, and power banks, besides exempting frozen and preserved vegetables from the indirect tax.
The government is targeting a CGST collection of Rs 6.1 trillion in FY20, a 21 per cent increase over the revised target of FY19. “Achieving this steep target would call for substantial increase in tax base by plugging the existing leakages, as room for increase in tax rate seems limited,” said Pratik Jain, partner and leader indirect tax, PwC India.
Devendra Kumar Pant, chief economist, India Ratings & Research, concurred that unless the pace of growth of GST collections as observed in 3QFY19 and 4QFY19 is sustained and accelerated, it would be difficult to achieve FY20 budgeted GST collections.
Source :- Business-standard.com