New Delhi: Goods and services tax (GST) collection stood at Rs 976 billion in November, falling Rs 24 billion short of the government’s average monthly target of Rs 1 trillion.
However, to mobilise Rs 12.3 trillion to reach the annual target, the government needed an average of Rs 1.107 trillion in each month from November to March. Taking this into account, the collection shortfall in November was around Rs 130 billion. If the trend continues, shortfall estimates by finance ministry officials as well as independent experts to the tune of Rs 500 billion could turn out to be true.
“The trend in GST collection in recent months suggests a likely full-year shortfall in indirect tax collections,” said Aditi Nayar, principal economist at Icra.
It might force the government to loosen the pressure on spending in key ministries and take back the unspent amount, officials indicated. “As we approach a general election, no new projects are launched, no new work orders are given, and the expenditure slows down. This will come as a relief in terms of balancing the fiscal (situation),” a government official said.
Total collection in the first eight months of 2018-19, or two-thirds of the financial year, stands at Rs 7.8 trillion, or 63 per cent of the annual target. Experts see it as a silver lining, since the November collection did not go below the average of the last seven months.
“The monthly collections have now stabilised between Rs 950 billion and 1,000 billion. Given that it is short of expectations, the government will have to work on measures to enhance the revenues such as more granular use of data analytics and further tightening of tax administration. It will be interesting to see if the GST Council still recommends further rationalisation of rates in the next few months,” said Pratik Jain, partner and leader, indirect tax, PwC India.
Abhishek Jain, tax partner, EY, said the steady increase in average collection brought a gleam of hope for a regular monthly collection of Rs 1 trillion being met soon.
The compliance levels have gone up, with the number of GSTR 3-B returns filed till the end of month rising to 6.96 million. However, the November figures bolster the possibility that the October collection crossed the Rs 1 trillion mark owing to the impact of the festival season.
IGST collection fell below Rs 500 billion after two months, in November. The degree of regular settlement of the IGST has, however, increased, with Rs 335 billion settled on a regular basis, the Rs t ever. After the IGST settlement, the accrual as the CGST and the SGST is Rs 351 billion and Rs 388 billion, respectively.
Courtesy: Business Standard