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GST collections cross Rs 1 lakh crore in October but challenges remain
Collections from the goods and services tax (GST) crossed Rs 1 lakh crore in October and are expected to rise further in the coming months, buoyed by an increase in consumption demand in the festive season and implementation of new anti-tax evasion measures.
Collections from the goods and services tax (GST) crossed Rs 1 lakh crore in October and are expected to rise further in the coming months, buoyed by an increase in consumption demand in the festive season and implementation of new anti-tax evasion measures.
The pick-up in the pace of GST collections will provide a respite to a government struggling to meet its fiscal deficit target of 3.3% of gross domestic product. However, the challenge for the government will be to maintain the momentum in the second half of the fiscal if it wants to make up for the lagging first half collections.
This is the second time this financial year that collections have crossed Rs 1 lakh crore — the monthly target set by the tax authorities. Collections had crossed Rs 1 lakh crore in April because of the spillover tax payments due the year earlier. The shortfall so far this year from the targets has been at least Rs 21,000 crore.
“GST collections for October 2018 have crossed Rs 1 lakh crore. The success of the GST is lower rates, lesser evasion, higher compliance, only one tax and negligible interference by taxation authorities,” finance minister Arun Jaitley wrote on micro-blogging site Twitter.
The government has been banking on improvement in consumption demand during the festive season after it cut tax rates on many white goods in July.
Further, implementation of some anti-tax evasion measures such as the e-way bill and mandatory TCS (tax collected at source) requirement for e-commerce companies from October are expected to shore up revenues.
Improvement in GST collections, along with the rupee’s appreciation by 50 paise, crude prices below 75% a barrel, and bond yields moderating to 7.8% are good news for the Indian economy, said Subhash Chandra Garg, secretary, department of economic affairs.
“Very good developments essential for sound macroeconomic performance of India,” he wrote on Twitter.
The possibility of a fiscal slippage will depend on how the revenue and expenditure risks crystallize in the coming months, said Aditi Nayar, principal economist, Icra Ltd. Uncertainty persists over GST revenues, dividends and profits, and disinvestment, and the adequacy of outlays for revised minimum support prices, the National Health Protection Scheme, fuel and other subsidies, and bank recapitalisation, she said.
The total GST collected in October (for sales in September) was Rs 1 trillion, of which central GST was Rs 16,464 crore, state GST was Rs 22,826 crore, integrated GST was Rs 53,419 crore and cess was Rs 8,000 crore.
In September, GST collections were at Rs 94,442 crore.
The thrust in collections and its alignment to the forecasted numbers were quite a welcome one, said Abhishek Jain, tax partner, EY.
“While a possible reason for an upsurge in September could be 2017-18 closing adjustments, this trend could be expected to continue with implementation of anti-evasion measures such as TDS/TCS,” he said.
Festive season demand has helped October collections and GST collections are expected to stabilize from hereon, said M.S. Mani, partner, Deloitte India. Mani, however, warned that businesses may face enforcement actions from the government in the event of lapses.
“It is now extremely important for businesses to ensure that the GST audits are appropriately handled as there would be pressure on the revenue authorities to continue with a base level monthly collection of Rs 1 trillion and errors would give room for enforcement actions.
