The monthly Goods and Services Tax collection declined to its lowest since its rollout after the apex body for the new nationwide sales tax cut rates on more than 200 items.
The government collected Rs 80,808 crore GST for November as on Dec. 25, said a statement by the Ministry of Finance. That compares with Rs 83,346 crore collected in October, Rs 92,150 crore in September, Rs 90,669 crore in August, and Rs 92,283 crore in July, according to statements issued by Ministry of Finance.
Of the total mop-up for November, Rs. 13,089 crore came from Central GST, Rs 18,650 crore from State GST, Rs 41,270 crore as Integrated GST and Rs 7,798 crore as compensation cess. 53.06 lakh returns were filed for the month of November till Dec. 25.
From the IGST collection, Rs 10,348 crore has been transferred to the CGST account, while Rs 14,488 crore is being transferred from IGST to SGST account by way of settlement of funds on inter-state business to customer transactions, the finance ministry release said.
The downward trend in GST revenue is a cause for concern, Abhishek Jain, indrect tax partner at EY India told BloombergQuint. “Though the reasons can be attributed to lowering of rates in mid-November, the expansion of tax base and buoyancy due to rate reduction should have ideally checked the dip in collections,” Jain said.
If the trend continues, the government may hesitate to rationalise rates further, he added.
The GST Council, in its Oct. 23 meeting, lowered rates on more than 200 items, most of which were brought to 18 percent from the highest 28 percent. The new slabs came into effect on Nov. 15. Bihar deputy chief minister Sushil Modi had said that was expected to cost the exchequer about Rs 20,000 crore.
The government had attributed the low October collection to the delay in introducing electronic way bills, reverse-charge mechanism—where recipients of goods and services pay tax instead of suppliers—and invoice matching that were meant to increase compliance. The GST Council on Dec. 16 decided to roll out e-way bills for the movement of goods between states two months earlier than planned from Feb. 1.
The dip in revenue is along expected lines given that rates of over 200 items were reduced from Nov. 15 and refunds to exporters were initiated recently, Pratik Jain, leader-indirect tax at PwC India said in an emailed statement
“Even for December, there could be an impact of opening credit(transitional credit) claim for which the last date is Dec. 27,” said Jain from PwC, adding that collections should stablise from January.
Watch this discussion with Aditi Nayar, economist at ICRA.