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New Delhi: E-way bills generated early in January showed a moderation amid rising cases of coronavirus and local mobility restrictions, showed data from GSTN, the company that processes tax returns.
In the first week of January, 2 million electronic permits were raised each day on an average, lower than 2.3 million in December. Taxes for January transactions will be collected in February.
Electronic permits for goods shipment within and across states have seen a sustained improvement after a drop at the beginning of this fiscal during the deadly second wave of the pandemic. This figure peaked in the run-up to the festive season to a daily average of 2.37 million in October. That spurred the second-highest goods and services tax (GST) revenue collection in November at ₹1.31 trillion.
With the sharp rise in covid cases, states such as Delhi, Maharashtra, Uttar Pradesh and Tamil Nadu have reimposed some mobility curbs. Prime Minister Narendra Modi on Thursday urged chief ministers to ensure livelihood and economic activities are least impacted by the new curbs. India reported more than 154,000 new cases on Friday, causing a 3.48% jump in active cases to 1.2 million.
Rating agencies are closely watching the situation. “We had forecast a 9% GDP growth for FY22, but given the unfolding pandemic, we see a mild downside. Contact intensive service sectors are sure to face a drop in demand," said Aditi Nayar, chief economist at ICRA Ltd.
CRISIL Ltd chief economist D.K. Joshi said the pandemic posed a downside risk to its earlier gross domestic product (GDP) growth forecast of 9.5%.
Moderation in consumption in the fiscal fourth quarter would be of concern to policymakers betting on a 9.2% GDP growth this fiscal, forecast in the first advance estimate released last week. It also indicated that household expenditure, the biggest driver of growth, is unlikely to surpass pre-pandemic levels. Private final consumption expenditure, projected at ₹8 trillion this fiscal, will cross the level seen in FY21 of ₹7.5 trillion but not scale the ₹8.3 trillion seen in FY20. Besides, the previous waves had shown that uncertainty about incomes and livelihoods forces people to save cash rather than to spend.
Tax collection, however, is a function of not just economic activity but compliance improvement, too. The Centre and states have been tightening rules relating to reporting obligations and the availability of tax credit to buyers in cases where the seller has not met the reporting and tax payment obligations. This trend is set to continue, given that states would not receive GST compensation from the Centre from June this year.
The over-71 million e-way bills were raised in December, an improvement on the 61.1 million seen in November; however, it could boost revenue collections in January.
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