Home > News > India > Relief for govt as GST collections remain above 1 trillion mark

NEW DELHI : Goods and services tax (GST) collections exceeded the 1 trillion mark for the second straight month in December, bringing some relief to policymakers fighting to boost consumption and liquidity in a slowing economy.

Central and state governments together collected 1.03 trillion in December, 9% more than what was collected in the year earlier. With an improvement in the performance of a number of leading indicators, including core sector industries, auto sales and non-oil merchandise exports, experts expect factory output to report modest growth in November after having contracted since September.

India’s GDP growth decelerated to a six-and-a-half-year low of 4.5% in the September quarter amid slowing domestic and external demand.

“The GST revenues during the month of December 2019 from domestic transactions have shown an impressive growth of 16% over the revenue during the month of December 2018," the finance ministry said. “If we consider IGST (integrated GST) collected from imports, the total revenue during December 2019 has increased by 9% in comparison to the revenue during December 2018. During this month, the IGST on import of goods has seen a negative growth of (-) 10%, but is an improvement over (-) 13% last month and (-) 20% in the month of October."

Staying steady
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Staying steady

Among major states and Union territories (UTs) that recorded a substantial jump in gross domestic GST collections are Assam (33%), Maharashtra (22%), Tamil Nadu (19%), Gujarat (18%), Delhi (18%), Kerala (17%), West Bengal (16%) and Madhya Pradesh (16%). The under-performers include Jharkhand (-3%), Odisha (2%), Goa (6%) and Rajasthan (10%).

Abhishek Jain, tax partner at EY India, said GST collections crossing 1 trillion for the second month in a row and a 16% growth on domestic transactions vis-à-vis December 2018 is a positive development. “It seems that efforts of the government, like restriction on availment of unmatched credits, to plug GST evasion is bearing results," he added.

Declining GST receipts in the past few months had led to tension in Centre-state relations as some states complained about a delay in payment of GST compensation from the central government.

Tax cuts and exemptions granted in several rounds since the rollout of GST have made it revenue-deficient rather than revenue-neutral, as was originally planned. Tax cuts on consumer goods have also led to a situation where businesses are paying more taxes on raw materials than on finished products and subsequently claiming the excess paid as refunds.

At the GST Council’s meeting on 18 December, officials made a presentation on revenue trends and suggestions on rejigging tax rates and slabs, but the council decided against taking it up due to the economic slowdown.

Finance ministers of central and state governments are likely to discuss restructuring GST slabs and rates as well as ways to handle a revenue shortfall and the GST compensation to states in the year starting 1 April after the Union budget is presented on 1 February, Mint reported on 30 December.

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