GST surpasses Rs 1 trn in April, FM says this confirms upswing in economy
If the governments at the Centre and in states indeed collect Rs 1 trillion, they will be able to garner Rs 12 trillion in 2018-19
The goods and services tax (GST) revenue collection crossed Rs 1 trillion in April, the highest in a month since the new indirect tax was rolled out in July last year. As many as 69.5 per cent of assessees filed summary input-output returns in April, against 64.61 per cent in the previous month. The mop-up at Rs 1.03 trillion far exceeded the Rs 898.8 billion average monthly collections for the first eight months after the GST was introduced, prompting Finance Minister Arun Jaitley to say that it mirrored enhanced economic activity.
“GST collections in April exceeding Rs 1 trillion are a landmark achievement and a confirmation of increased economic activity as brought out by other reports,” he tweeted.However, the finance ministry clarified that the April collection could not be taken as a trend. “It is usually noticed that in the last month of a financial year, people try to pay arrears of some of the previous months. Therefore, this month’s revenue cannot be taken as trend for the future,” it said.
Experts were, however, optimistic that GST collections had stabilised. “Crossing Rs 1 trillion is a significant milestone in the GST journey and it is now expected that revenue will stabilise in that range, considering the series of anti-evasion measures taken or proposed,” said M S Mani, partner, Deloitte India.
The figure released by the finance ministry is for payment received for the entire month of April. Earlier, it used to provide figures for payments made till 20th of the month. The highest monthly figure in 2017-18 was for September (paid till October 20) at Rs 951 billion.
If the governments at the Centre and in states indeed collect Rs 1 trillion, they will be able to garner Rs 12 trillion in 2018-19, slightly higher than the Union Budget projections and incorporating 14 per cent year-on-year growth in state revenue collections. The finance minister had last year also taken 14 per cent growth for states revenues to fix a target, based on the formula for compensating states.
The Union Budget has projected GST revenues to be Rs 7.4 trillion for 2018-19. If compensation cess, projected at Rs 900 billion is taken away, it would amount to Rs 6.5 trillion. The state GST (SGST) stood at Rs 2.91 trillion in the first eight months of 2017-18. On a pro rata basis, this amounts to Rs 4.4 trillion for 12 months. Incorporating 14 per cent growth, the states’ GST revenue should be Rs 5 trillion and the total revenue should be Rs 11.5 trillion.
However, there will be some overlap of the integrated GST (IGST) because the figures given for states for the first eight months of 2017-18 also included IGST distribution for the month of July, the first month of the GST roll-out. “The buoyancy in tax revenue of the GST reflects the upswing in the economy and better compliance,” the finance ministry said.
The central GST (CGST) collected in April stood at Rs 186.52 billion; SGST Rs 257.04 billion; IGST Rs 505.48 billion, including 212.46 billion collected on imports; and cess of Rs 85.54 billion.The total revenue earned by the Centre and the state governments after settlement in the month of April stood at Rs 324.93 billion for the CGST and Rs 402.57 billion for the SGST.
“Though there will be some impact of the year-end push and adjustments, it is clear that compliance is steadily improving. With the introduction of the e-way bill system now, one can expect collection for April (to be paid in May) also to exceed Rs 1 trillion,” said Pratik Jain, partner and leader, indirect tax, PwC.
“With anti-evasion measures like the e-way bill introduced and others like tax deducted at source, tax collected at source and credit matching, which may be introduced in the coming months, the government can be hopeful of very good GST collections in the current fiscal year,” said Abhishek Jain, partner, EY.Composition dealers, availing quarterly filing and a flat tax rate, paid a tax of Rs 5.79 billion for the quarter. Of the 1.9 million composition dealers, 1.1 million filed their quarterly return, the GSTR 4.
India’s GST collections in the first year of its roll-out stood at Rs 7.41 trillion.Suresh Nandlal Rohira, partner, Grant Thornton India, said the GST collections could be taken as a reflection of optimism in the economy. The government has pegged economic growth this year at 7-7.5 per cent, against 6.6 per cent estimated for 2017-18.
The Business Standard, New Delhi, 02nd May 2018