Government Collects Lowest Monthly GST Revenue In October
GST collected for October stood at Rs 83,346 crore as on Nov. 27.
The government collected the lowest monthly revenue yet from the Goods and Services Tax in October as businesses used input credits to offset their liability.
GST collected for October stood at Rs 83,346 crore as on Nov. 27, a finance ministry press release said. That compares with Rs 92,150 crore collected in September, according to numbers released till Oct. 23. The government had mopped up Rs 90,669 crore in August and Rs 92,283 crore in July.
Taxpayers used credits they got for taxes paid on the stock purchased before the GST rollout. Also, in the first three months of the GST rollout, there was an additional cash flow in Integrated GST levied on inter-state transfer of goods. Companies received credits for such transactions that they could offset against Central and State GST liability.
“As and when the final transaction of these goods takes place, the credit of IGST is being utilised for payment of SGST and CGST and therefore, the inflow of new taxes is low,” the statement said.
This is a significant dip in GST revenue as compared to previous months, and this does not include rates cut by the GST Council in its last meeting which came into effect from November 15, said Abhishek Jain, indirect tax partner at EY India. “Moreover, the government has still not disbursed export-related refunds , estimated to the tune of Rs 50,000 crore.” Besides, transition credits were availed by taxpayers even in previous months and not just in October, Jain said.
The government also cited GST Council’s decision to cut tax rates of some items prior to the last meeting and a delay in matching self-declared returns as reasons for the drop in revenue collection.
The government that delayed implementation of matching returns and it wasn’t a good enough reason for the decline in collections, said Amit Sarkar, head-indirect tax at law firm BDO India LLP.
Finance Minister Arun Jaitley, however, is hopeful the final tally for October will be higher. He expects another Rs 5,000 crore in GST collection for the month, Bloomberg reported.
Centre Compensates States
The central government paid states Rs 10,806 as compensation for the revenue lost in July and August and the amount jumped to Rs 13,695 crore in September and October, the release said.
The government compensates states for any losses in the first five years of GST implementation, according to the Goods and Services (Compensation to States) Act, 2017. The compensation is calculated based on a 14 percent growth in state revenue in 2015-16, the base year.
Return Filing Gains Steam
About 95.9 lakh taxpayers have been registered under GST so far, of which 15.1 lakh have availed the composition scheme, the release said. About 50.1 lakh returns were filed for October as on November 26, while returns filed for July, August and September stood at 58.7 lakh, 58.9 lakh and 57.3 lakh, respectively, according to the release.