GST collections at Rs 96,483 crore in July, higher than June but still short of Rs 1 lakh-cr mark
Revenue collection from Goods and Services Tax (GST) steadily rose to Rs 96,483 crore in the month of July, from Rs 95,610 crore in June, data released by Finance Ministry showed.
The rise in revenue has been accompanied with increased compliance, with 66 lakh tax assesses filing GSTR 3B or summary returns for the month of July, as compared with 64.69 lakh in June.
Despite a rise in revenue collection in July, the mop-up is still lower than the government’s monthly target of Rs 1 lakh crore. The 2018-19 budgeted estimate for GST collection is Rs 12 lakh crore.
Achieving the revenue collection target is crucial as it has a direct bearing on the fiscal deficit, which is a gap between government’s revenue and expenditure.
While Rs 1.03 lakh crore was collected in April, revenue from GST fell to Rs 94,016 in May. The finance ministry had attributed the buoyancy in tax revenue in April--indicating domestic sales for the month of March--to ‘year-end effect’, when people also try to pay arrears of some of the previous months.
Tax collection in the first quarter of the financial year is subdued as manufacturing activity takes a breather, order inflows slow amidst setting of targets for the new financial year, while picking up pace in the second half of the year.
According to MS Mani, Partner at Deloitte India, while tax collection approaches the ‘magical’ Rs 1 lakh crore mark gradually, the slower-than-expected increase in the returns filed would be a matter of concern for the policymakers.
“The trend of a marginal increase in the GST tax collections continues during July and there would be some concerns on when a stable Rs 1 lakh crore plus target world be achieved and the steps required to be taken to prevent fiscal slippages,” Mani said.
Out of the total collection, Central GST (CGST) was Rs 15,877 crore, with states garnering Rs 22,293 crore State GST (SGST). Rs 8,362 crore was received as cess, with Rs 49,951 crore collected as Integrated GST (IGST), which is levied on inter-state supply of goods and services and is divided between states and the Centre.
For April-May, Rs 3,899 crore has been released to the states as GST compensation for the revenue loss incurred by them due to the transition to a new indirect tax system.
While experts believe that the rising GST collection is a healthy trend, but the rate cut on more than 80 items announced on July 21 may affect the uptrend.
“It is estimated that the rate cuts may lead to the reduction of GST to approximately Rs 1,000 crore per month. However, this reduction may be offset against the increased demands of these high price sensitive products,” Abhishek A Rastogi, Partner, Khaitan & Co said.
Vishal Raheja, DGM GST, Taxmann expects higher compliance percentage in the future due to reforms such as simplified return procedures and periodicity of filing of returns.
“It will positively impact GST collections in upcoming months,” Raheja said.