Modi government faces GST revenue crisis: analysts | Mint
Active Stocks
Wed Feb 21 2024 11:16:29
  1. Tata Steel share price
  2. 144.80 2.66%
  1. Bharti Airtel share price
  2. 1,154.00 0.86%
  1. State Bank Of India share price
  2. 763.35 0.43%
  1. Power Grid Corporation Of India share price
  2. 283.15 -1.67%
  1. ITC share price
  2. 407.75 0.42%
Business News/ News / India/  Modi government faces GST revenue crisis: analysts
BackBack

Modi government faces GST revenue crisis: analysts

GST receipts which had touched ₹1.13 trillion in April this year could not sustain that growth subsequently
  • The subdued trend in GST receipts coincides with a sharp slowdown in economy
  • GST rates have been lowered on an array of commonly used goods and services which resulted in monthly savings for consumers, the source said. Photo: PTIPremium
    GST rates have been lowered on an array of commonly used goods and services which resulted in monthly savings for consumers, the source said. Photo: PTI

    The sluggish growth in Goods and Services Tax (GST) revenue receipts, unless reversed quickly, could lead to a 40,000 crore shortfall by the end of the current fiscal, straining finances of the central government which is required to make good on states’ revenue loss, analysts at Credit Suisse have warned.

    The finance ministry on Sunday said the Centre and state governments collected 98,202 crore in GST in August, 4.5% more than what was collected in the corresponding month a year ago, but lower than the over 1 trillion collected in July this year.

    GST collection which touched 1.13 trillion in April this year have not sustain the momentum. The subdued trend in GST receipts coincides with a sharp slowdown in economy, which expanded at 5% in the June quarter, its slowest pace in six years.

    According to the Credit Suisse note, growth in indirect tax mop-up in the first five months of the current fiscal has been 6.4%, well below the 10% estimated for the year. If this pace is maintained for the full year, the shortfall could be 40,000 crore, it said. The central government compensates states from the revenue generated through a cess imposed on sale of certain products such as automobiles.

    “The rules are not clear to us, but if compensation need exceeds (the) cess collected, the extra funds would go out from general fiscal expenses. While this is just a centre-state allocation issue, it can have a negative growth impact," said the note.

    Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

    ABOUT THE AUTHOR
    Gireesh Chandra Prasad
    Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
    Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
    More Less
    Published: 04 Sep 2019, 03:56 PM IST
    Next Story footLogo
    Recommended For You
    Switch to the Mint app for fast and personalized news - Get App