GST collections jumped 27% in March at a record ₹1.24 lakh crore
The Goods and Services Tax (GST) collection in March was an all-time high at ₹1,23,902 crore, 27% higher than the revenue in the year-ago period and a 9.5% jump over the previous month’s revenue -- numbers that experts said reflect the ongoing economic recovery and better technology-driven compliance.
“I’m sure this trend will continue,” said economic affairs secretary Tarun Bajaj, who holds the additional portfolio of revenue. Faster economic recovery, simplified rules, and use of technology to check tax evasions are the key reasons for robust GST collections, he added.
The revenue collection exceeded the ₹1 lakh crore benchmark for the sixth consecutive month, growing for the seventh month in row since September 2020, after remaining in contraction mode for six straight months since March 2020 on account of the Covid-19 pandemic, and restrictions necessitated by it, including a 68-day long hard lockdown.
The Indian economy came out of recession only in the third quarter ended December 31 with 0.4% growth after it remained in contraction mode for two consecutive quarters.
Despite over ₹1 lakh crore collections for six straight months, the total GST mop up in 2020-21 contracted by 7% at around ₹11.37 lakh crore compared to ₹12.22 lakh crore in 2019-20. Still, the number was higher than previously expected.
The Indian economy is expected to contract by 8% in 2020-21 according to the government. It is also expected to bounce back to a 11% growth in 2021-22 according to the Economic Survey. On Wednesday, the World Bank said in a report that it expects the Indian economy to grow by anything between 7.5% and 12.5% in the year, with the likely rate being 10.1%.
“The GST revenue witnessed growth rate of (-) 41%, (-) 8%, 8% and 14% in the first, second, third and fourth quarters of this financial year, respectively, as compared to the same period last year, clearly indicating the trend in recovery of GST revenues as well as the economy as a whole,” the Union finance ministry said in a statement.
In the month of March, revenues from import of goods were 70% higher and the revenues from domestic transaction (including import of services) 17% higher than the revenues from these sources during the same month last year, it said.
MS Mani, senior director at consultancy firm Deloitte India, said: “In addition to the trend of higher overall GST collections over the past six months, all major states have shown a significant increase compared to the previous year. Further the increase in collections on imports accompanied by the increase in domestic transactions would indicate that the overall production/consumption cycle is back to normal.”
According to official data, Gujarat and Delhi posted a 20% year-on-year revenue growth in March West Bengal saw an annualised revenue growth of 22%, Uttar Pradesh (18%), Haryana (17%), Rajasthan (19%), Bihar (13%), Assam (8%), Orissa (25%), Chhattisgarh (22%), Madhya Pradesh (13%), Maharashtra (14%), Karnataka (11%), Kerala (24%), Tamil Nadu (23%), Telangana (17%) and Andhra Pradesh (5%).
Experts said that making e-invoicing mandatory has helped augment revenue as the mechanism makes tax evasion difficult. The move to a compulsory e-invoicing system from January this year plugged business-to-business (B2B) tax evasion to a great extent as transactions above ₹100 crore are mostly B2B, where correct invoicing is insisted on by both parties, buyers and sellers to avail input tax credits and avoid penalties.
“As the new fiscal year begins, e-invoicing will be mandatory for B2B transactions for taxpayers having turnover of over ₹50 crore. The move is necessary to keep a check on the frauds being committed as there have been numerous instances of fudging of books,” said Rajesh Gupta, co-founder and director of accounting software firm Busy Infotech.