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GST collections fell below ₹1 lakh crore after 8 months, but rose 2% Y-o-Y
The revenue of June this year includes GST collections from domestic transactions between June 5 and July 5 as the government gave various relief measures such as reduction in interest on delayed return filing because of the second wave, a ministry spokesperson said
The Goods and Services Tax (GST) collection in June, which reflects actual business transactions in the previous month, fell below ₹1 lakh crore for the first time after eight months due to the second wave of pandemic, but posted about 2% year-on-year growth at ₹92,849 crore.
“The GST collection for June 2021 is related to the business transactions made during May 2021. During May 2021, most of the states/UTs [Union territories] were under either complete or partial lock down due to Covid,” the finance ministry said while releasing the data five days behind the schedule to accommodate extensions of various deadlines.
The revenue of June this year includes GST collections from domestic transactions between June 5 and July 5 as the government gave various relief measures such as reduction in interest on delayed return filing because of the second wave, a ministry spokesperson said.
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The month of May saw a sharp decline in business transactions as the electronic way (e-way) bill generation saw about 32% drop at 39.9 million compared to 58.8 million in the preceding month. The second wave hit both April and May months severely leading to lockdowns in several business centres across the country.
Comparatively, the number of e-way bills in April fell by 17.5% to 58.7 million. Total e-way bills in March this year was 71.2 million. The GST revenue for May (reflecting actual transactions of April), however, surpassed ₹1 lakh crore mark at ₹102,709 crore, but with over 27% contraction compared to the record collections of ₹141,384 crore in the preceding month (April 2021).
Abhishek Jain, tax partner at consultancy firm EY India, said, “The [June 2021] collections are for the supplies made in the month of May, where several parts of the country were under the lockdown, so this dip is on the expected lines. With significant relaxations in lockdown and business supplies picking up, the collections should see a definite uptick in the coming months.”
The finance ministry spokesperson said the latest data on e-way bills indicated recovery of trade and businesses with reduction in caseload and easing of lockdowns. Over 54.7 million e-way bills have been generated in June 2021.
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Deloitte India senior director MS Mani said the GST collection in June is “satisfactory” considering the fact that it relates to transactions in May 2021 which was badly impacted by the pandemic. “These numbers also reflect the economic resilience shown during the recent pandemic phase [the second wave],” he said.
The impact of Covid-19 pandemic in the current financial year is less severe compared to 2020-21. The second wave is, however, expected to have a lingering effect on the economy. Global rating agency S&P on Friday lowered India’s GDP growth forecast to 9.5% in the current fiscal year compared to its prediction of 11% in March, just before the second wave.
GST revenues had plunged when the first wave had hit India about a year ago. Businesses performed poorly last year because of a 68-day hard nationwide lockdown for over two months since March 25, 2020, that saw the GST fall an all-time low at ₹32,172 crore in April 2020. The severity of the lockdowns since April this year was not so hard because business activities were suspended only in containment zones.
