GST mop-up at Rs 86,449 crore in August

Business & Economics

The Centre has recently presented before the states two borrowing options to resolve the issue of revenue shortfall.

The goods and services tax collection in August, which pertains largely to transactions conducted in July, came in at Rs 86,449 crore, 12% lower than the amount collected a year ago, the government said on Tuesday. GST collections in July had come in at Rs 87,422 crore, or 86% of the collection a year ago.

While the first quarter GST collection in FY21 was only 59% of the same period last year, the collection improved to nearly 70% in April-July period compared with the year-ago period.

GST collections had nosedived to a record low of Rs 32,294 crore in April, which was down 72% on year, owing to the lockdown.

After regular settlement of integrated GST, revenues earned by the central government and the state governments after regular settlement are Rs 34,122 crore and Rs 35,714 crore, respectively.

To put the state GST collection in perspective, the monthly protected revenue for all states combined is `63,800 crore. The GST comprises the Centre and state components and is applied on the same base of transactions.

The cess collection for August came in at Rs 7,215 crore.

The Centre has estimated that the deficit for states against their protected revenue is likely to be Rs 3 lakh crore for the current fiscal, which after adjusting for estimated annual cess collection of Rs 65,000 crore, is seen at Rs 2.35 lakh crore. This estimate roughly assumes the gross GST mop-up/month in August-March at roughly Rs 90,000 crore.

The Centre has recently presented before the states two borrowing options to resolve the issue of revenue shortfall.

During August, the revenues from import of goods were 77% and the revenues from domestic transaction (including import of services) were 92% of the revenues from these sources a year ago, the government said. “It may also be noted that the taxpayers with turnover less than Rs 5 crore continue to enjoy relaxation in filing of returns till September,” it added.

Some states that recorded higher collection than last year include Rajasthan (1%), Uttar Pradesh (2%), Uttarakhand (7%) and Chhatisgarh (6%).

MS Mani, partner at Deloitte India, said: “Coming in the backdrop of the disappointing GDP data for Q1 yesterday, these figures indicate that the collections are on the recovery path in first month of Q2 . The fact that the GST collections on domestic transactions is just 8% lower than the same month last year would indicate a revival of economic activities. The sharp drop of 23% in the import GST could be on account of the various import substitution measures announced in recent times.”

“A significant part of the dip is attributable to imports, which has witnessed a decline with the impact on international trade with this pandemic. Also, domestic collections having attained 92% y-o-y for operations in July is a sign of economic recovery post lockdown,” Abhishek Jain, tax partner at EY, said.

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