GST collection for first month at Rs92,283 crore, exceeds estimates: FM Arun Jaitley
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New Delhi: The goods and services tax (GST), launched on 1 July, has got off to a good start, with collections exceeding the revenue target for the first month.
And this is when a third of the tax payers are yet to submit their returns and tender their tax dues. The government is cautiously optimistic that GST revenues will stay on course for the remaining eight months of 2017-18.
Addressing a press conference, finance minister Arun Jaitley disclosed that in July, Rs92,283 crore had been received as GST receipts from 3.9 million tax payers, compared with the target of Rs91,000 crore.
Not only does this put to rest fears, at least for the time being, that the transition to GST could lead to revenue losses, it is also a shot in the arm for the Union and state governments which had backed the reform initiative.
GST, which subsumed a slew of central, state and local taxes, economically unified the country by removing inter-state barriers to trade, creating the basis for a more efficient economy.
“At least the red line seems to have been crossed. Technically, with 64.42% of tax payers’ compliance, we have exceeded target,” Jaitley told reporters.
GST levied on supply of goods and services has two equal components—central GST (CGST) and state GST (SGST). Tax on inter-state commerce called integrated GST (IGST), too, has two equal components, the proceeds of which go to Union government and to the state where the product or service is finally consumed.
Products which are in the nature of luxury or polluting fuel are levied a cess over and above the 28% tax rate, called the compensation cess. The cess is aimed at compensating states for any revenue shortfall caused by the switch to the new indirect tax regime.
The minister clarified that in addition to the 7.2 million tax payers who migrated to GST from the earlier tax regime, an extra 1.8 million new assessees have been added. Of this, however, only 5.9 million were due to file their returns by 25 August. This is because 3.1 million assessees include those who were registered in August as well as some who opted for a liberal quarterly tax payment scheme.
From this, only 3.8 million—representing 64.4%—paid taxes by the 25 August deadline. Those who missed the deadline can pay up, but will be charged a nominal late fee of Rs100 per day separately for central and state GST.
Jaitley said as more people complete registration formalities and pay taxes with the late fee, total receipts could further improve.
The minister, however, cautioned that it should be borne in mind that the GST collection included the cess levied on products such as tobacco, coal and cars.
While the state GST target of Rs43,000 crore and the Union government’s target of Rs48,000 crore as a whole has been achieved, the government is yet to assess if individual states have met their targets.
If not, their shortfall would have to be made up for from the Rs7,198 crore of GST cess amount collected, Jaitley added. Total GST receipts for the month include CGST of Rs14,894 crore, SGST of Rs22,722 crore, and IGST of Rs47,469 cores; the cess made up the balance.
Pratik Jain, partner and leader, indirect tax, PwC India, said the July GST receipts looked quite encouraging, given the fact that the new tax regime is still stabilizing. “It is also to be noted that only 64% of registered dealers have actually done the compliances and therefore the actual collection could go up in next few days,” said Jain.