E-way bills suggest GST receipts could see a decline in May
Data showed that e-way bills generated for the movement of goods within and across states in April dropped by 31% to 48.9 million from 71 million in March.
Goods and services tax (GST) collections of the central and state governments could come off their peak in May after touching a record high of ₹1.41 lakh crore in April, according to data on the number of e-permits generated for the movement of goods in April.
Data showed that e-way bills generated for the movement of goods within and across states in April dropped by 31% to 48.9 million from 71 million in March. Movement restrictions are in place in several parts of the country as the authorities seek to contain coronavirus infections. Taxes for April sales are paid in May.
The e-way bill generation data for April compares with the levels in July and August 2020, when monthly e-way bills generated were below 50 million and the economy was beginning to emerge out of the impact of the nationwide lockdown. The corresponding GST receipts for the months were below ₹1 lakh crore— ₹86,449 crore in August and ₹95,480 crore in September.
GST receipts in the following months were above ₹1 lakh crore, reflecting the economic recovery and a host of measures by the tax authorities to check evasion, including the drive against the use of fake invoices by businesses.
The finance ministry attributed the record tax collections in April to sustained economic recovery and the resilience of the industry. However, industry watchers said the spike in transactions in the last month of a fiscal year was due to the usual higher spending during elections and higher commodity prices.
Typically, with the financial year drawing to a close, businesses tend to send out shipments to meet their targets for the year, they said.
Following the surge in Covid cases sweeping India, lockdown-like restrictions have been imposed on the movement and assembly of people across the country, including in large state economies such as Delhi, Maharashtra, Uttar Pradesh and Haryana. “The moderation in e-way bill generation in April reflects the supply chain disruption and slowdown in consumption, as discretionary spending is affected by the pandemic. This would have an impact on GST receipts in May for the sales in April. Containment of the second wave of the pandemic and easing of mobility restrictions will help GST receipts to recover, which will also be aided by pent-up demand,” said Abhishek Jain, tax partner, EY.
The second wave has raised doubts about a rebound in economic growth in FY22 after an expected 7.7% contraction in the year before.