Tepid growth in revenue from taxes is emblematic of sluggish demand amid a slowdown in the economy. Besides, falling indirect tax revenue, data released by the government on Monday showed that output of India’s eight infrastructure sectors contracted for the first time in more than four years and declined 0.5% in August.
“The lower collections seem to be on account of the lower GDP (gross domestic product) growth numbers that we have seen as GST is a transaction tax that is immediately impacted by any decline in any economic activity. However the subsequent festival season is expected to improve collections." MS Mani, Partner at Deloitte India said.
GST collection stood at ₹98,202 crore in August. “The total gross GST revenue collected in the month of September, 2019 is ₹91,916 crore of which CGST (Central GST) is ₹16,630 crore, SGST (State GST) is ₹22,598 crore, IGST (Integrated GST) is ₹45,069 crore (including ₹22,097 crore collected on imports) and cess is ₹7,620 crore (including ₹728 crore collected on imports)," the finance ministry said in a statement.
As many as 7.59 million GSTR 3Bs (summary returns) were filed till August 30 for September against 7.80 million in the previous month.
“The lower collection, perhaps do reflect the economic reality on the ground and the government will need to find ways to spur the demand. Further there is negative growth on import IGST. From government's perspective, it may also mean that focus on non tax revenues will need to be more. Also, with virtually no room for increase in GST rates, further strengthening of administrative measures may be needed to improve the level of compliances," Pratik Jain, Partner and Leader at PwC India said, adding that it is unlikely that further there will be GST rate cuts this financial year.
GST collection has been above the ₹1 lakh crore mark during April-July, after which it declined in August and September. The government aims to garner ₹6.63 trillion, minus the state’s portion of revenue, according to the budgeted estimates.
Experts believe that tax collection will pick with the onset of the festive season. Besides, slew of measures taken by the finance minister Nirmala Sitharaman pertaining to corporate tax cut, outreach programmes to increase access to credit and sector-specific measures to provide relief to homebuyers, exporters, automobile companies, in over last one month is expected to boost growth.
“With the recently announced fiscal and economic measures coupled with the upcoming festive season, the demand and related GST collections may witness an increase in the coming months. Stricter controls on tax evasion and audits by the revenue authorities may also help in improving the collections." Abhishek Jain, Tax Partner, EY India.
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