GST Collections Cross Rs 1-Lakh-Crore Mark For Second Straight Month
Indian two thousand rupee banknotes are arranged for a photograph in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

GST Collections Cross Rs 1-Lakh-Crore Mark For Second Straight Month

The government’s goods and services tax collection for November stayed above the Rs 1-lakh-crore mark for the second straight month as consumption rose during the festive season.

GST collections for November, collected in December, remained flat at Rs 1.03 lakh crore over the previous month, according to a statement by the finance ministry. GST collections for September stood at Rs 95,380 crore.

That’s a year-on-year growth of 8.9 percent and 5.1 percent above the monthly average of Rs 98,114 crore for FY19.

“The GST collections crossing Rs 1 lakh crore for second month in a row is quite a positive development. It seems that efforts of the government like restriction on availment of unmatched credits to plug GST evasion is bearing results,” said Abhishek Jain, tax partner at EY.

The ITC Change

It is important to consider the rule changes governing input tax credit claims when assessing the increase in the monthly revenue. Starting November, the government curtailed the ITC claimable without matching invoices to 20 percent. Pratik Jain, the leader of PWC’s indirect tax practice explains it thus...

The 20 percent rule is applicable from Nov. 19 onwards (for October returns). The way it works is like this:
Assume, total GST reflected in GSTR 2A (i.e invoice details submitted by vendors) = 100
Amount matched with company's records = 80
Amount not reconciled = 20
Total input credit that can be claimed = 80 + 20% of 80 = 96

“Because of this change, typically the amount of input credit for the companies have reduced on monthly basis,” Jain said. The lower input tax credit claimed the higher the taxes paid.

In fact, there are few large companies who have chosen to claim credit of only matched amount (80 in above example) till the system stabilises. However, it has also resulted in companies putting control mechanism in place and nudging the vendors to file returns in time. This is reflected from significant increase in number of GSTR 3B filed in November and December (78 and 81 lakh respectively) compared to October which was below 74 lakh.
Pratik Jain, Partner and Leader, Indirect Tax, PWC India

The imposition of the 20 percent threshold would have boosted November’s revenue collection, though the quantum is difficult to estimate.

January onwards, the GST revenue numbers will be further impacted as the 20 percent limit has recently been reduced to 10 percent.

Here’s a break-up of tax collected under various heads:

  • Central GST: Rs 19,962 crore
  • State GST: Rs 26,792 crore
  • Integrated GST: Rs 48,099 crore
  • Compensation Cess: Rs 8,311 crore.

Integrated GST is settled between the states and the central government based on consumption in respective states.

The number of GST returns filed improved over the previous month. The total number of GSTR-3B returns filed for the month of November, by Dec. 31, stood at 81.2 lakh compared with 77.83 lakh in October and 73.83 lakh in September, the statement said.

Earlier this month, the finance ministry set its monthly GST collection target at Rs 1.1 lakh crore, amid talks that the government is likely to miss its tax collection target for 2019-20, PTI reported.

The government has collected Rs 9.08 lakh crore in GST collections so far this fiscal, versus Rs 8.71 lakh crore in the same period last fiscal. That’s a just over 4 percent increase in revenue collection so far.

GST Collections Cross Rs 1-Lakh-Crore Mark For Second Straight Month
BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.