GST Collections For July Fall Below The Rs 1 Lakh Crore Mark
The number of GST returns filed during August marginally improved over the previous month.
India's slowing growth and consumption has hit the government's GST collections as well.
Goods and Services Tax paid for July (collected in August) dropped to Rs 98,202 crore as against Rs 1.02 lakh crore collected in June, according to a statement from the Union Ministry of Finance. That’s a 4.51 percent rise over the year-ago period but only 0.1 percent higher than the monthly average of Rs 98,114 crore in 2018-19.
India’s gross domestic product grew 5 percent in April-June 2019, the slowest pace in six years, as a sharper-than-expected fall in private consumption took its toll on the economy. Private consumption, reflected in private final consumption expenditure, grew by 3.1 percent in Q1 FY20 compared to 7.2 percent in Q4 FY19.
GST collections falling below 1 lakh crore can be linked to the general slowdown in the industry, said Abhishek Jain, indirect tax partner at EY India.
Agreed Rajat Mohan, senior partner at tax consultancy AMRG & Associates. According to him, job-creating sectors, such as real estate, automobile, and manufacturing, are having a "bumpy ride"—leading to an overall fall in GDP growth and worsening the purchasing power of consumers.
"Lowering of net disposable income in the hands of households is pushing them to restrict and defer their consumption, which is reflected in latest tax collections," Mohan told BloombergQuint.
Better Compliance
EY India’s Jain, however, sees a silver lining emerging on the tax-revenue front. That GST collections have risen 4.51 percent year-on-year indicates better compliance and payment, he said.
The number of GST returns filed during August marginally improved over the previous month. The total number of GSTR-3B returns filed for the month of July by Aug. 31 stood at 75.80 lakh compared with 75.79 lakh filed for June, and 74.38 lakh for May.
Break-up of GST collected under various heads:
- Central GST: Rs 17,733 crore
- State GST: Rs 24,239 crore
- Integrated GST: Rs 48,958 crore
- Compensation Cess: Rs 7,273 crore
Integrated GST is settled between the states and the central government, based on consumption in the respective state. From the IGST collected during the month, Rs 23,165 crore was transferred as Central GST and Rs 16,623 crore was settled as State GST. Total revenue earned by the central and state governments after the settlement was Rs 40,898 crore and Rs 40,862 crore, respectively, the statement said.
The central government will compensate states once in every two months for the losses they incur in the first five years of the implementation of GST. The central government has released Rs 27,955 crore to the states as GST compensation for the months of June-July, 2019, as against Rs 17,789 crore transferred in April-May.