New Delhi, Oct 1 (IANS) Reflecting the consumption slowdown in the economy, the goods and services tax (GST) collection fell 2.67 per cent to Rs 91,916 crore in September on a year-on-year basis.
This is the lowest monthly number since February 2018, adding pressure on the government’s finances. The figure is much lower than Rs 1 lakh crore-mark with experts terming it worrying for the government.
“The total gross GST revenue collected in the month of September, 2019 is Rs 91,916 crore of which CGST is Rs 16,630 crore, SGST is Rs 22,598 crore, IGST is Rs 45,069 crore (including a, 22,097 crore collected on imports) and cess is Rs 7,620 crore (including Rs 728 crore collected on imports),”a Finance Ministry statement said.
The total number of GSTR 3B returns filed for the month of August up to September 30, 2019 was 75.94 lakh.
The government has settled Rs 21,131 crore to CGST and Rs 15,121 crore to SGST from IGST as regular settlement.
“The total revenue earned by Central government and the state governments after regular settlement in the month of September, 2019 was Rs 37,761 crore for CGST and Rs 37,719 crore for the SGST,” the statement said.
Aditi Nayar, Principal Economist at ICRA, said that the year-on-year decline in the headline GST collections in the month of September 2019 and the sub 5 per cent growth in H1 FY2020 have reinforced concerns regarding impending shortfalls in the Government of India’s indirect tax collections relative to the budgeted target for FY20.
“This is a risk not only for the Central government’s fiscal situation but also for the state governments which receive 42 per cent of shareable central taxes as central tax devolution,” Nayar said.
With the government already committed to scaling up public spending to boost the sagging economy, lower GST collection could throw its fiscal maths out of gear. By lowering corporate tax, it has already taken a big bet.
Tax experts said that GST collection should improve on festive season demand starting this month.
“October-December is the period when India spends the most. Going by the initial trends of consumption, the big billion sale of Flipkart and Amazon is happening and a certain level (of sales) is being maintained. People are starting to buy more. It will be important to see if government is able to make up for the lower collection in the next three months,” said Amit Kumar Sarkar, Managing Partner, Versari Advisors India LLP.
He said that government needs to collect Rs 1,10,000 crore to Rs 1,15,000 crore on an average in November-January period. Then, the GST slowdown and the collections around that would probably get squared off.
Finance Minister Nirmala Sitharaman had in July significantly lowered her projections for GST collections in the Budget for 2019-20 against the interim Budget presented in February. Accordingly, Centre expects to collect Rs 6.63 lakh crore, down 13 per cent against previous estimate of Rs 7.6 lakh crore.
M.S. Mani, Partner, Deloitte India said that the lower collections seem to be on account of the lower GDP growth numbers as GST is a transaction tax which is immediately impacted by any decline in economic activity.
“However, the subsequent festival season is expected to improve collections, “he added.
Sectors such as automobile and housing have witnessed extended slowdown with demand remaining muted. The Centre has announced a slew of measures to boost the economy and prop up various sectors but the outcome is yet to be seen.
In a major tax bonanza, the government last month announced to reduce corporate tax to 22 per cent from 30 per cent hoping it will boost investment and growth. Subsequently, it also reduced GST on various goods and services such as hotels and gems & jewellery items to spur growth.