GST collection in February expected to top ₹1 lakh crore
The Goods and Services Tax (GST) collection in February is expected to top ₹1 lakh crore for the fifth month in a row in February, making it the longest streak in which the landmark has been crossed since the indirect tax regime was launched in July 2017, indicating a robust economic revival.
Early indicators such as number of e-way bills generated in the first three weeks of February suggest that GST collections in February will be in excess of ₹1 lakh crore and mark an increase from the year-ago month, two officials aware of the matter said, requesting anonymity. GST revenue collection in February 2020 was ₹1.05 lakh crore.
According to one of the officials, the number of e-way bills generated in the month by February 21 was 52 million compared to 62.8 million in January , when GST collections jumped to all-time high at around ₹1.20 lakh crore. E-way bills are essential for the intra-state movement of goods.
“With numbers [of e-way bill and revenue collection] for seven more days yet to come, we expect significant GST collection,” the second person said.
Experts credit two key factors for improving collections – a robust economic recovery after the resumption of economic and business activities post the Covid-19 lockdown, and better compliance.
The Indian economy contracted by 23.9% in the first quarter of the current financial year mainly because of a 68-day hard nationwide lockdown enforced on March 25, but quickly recovered to contract by a slower 7.5% in the quarter ended September 30. The launch of the Covid-19 vaccination drive on January 16 has given further impetus to the economy, which the International Monetary Fund (IMF) projects will expand 11.5% in 2021-22 and the Economic Survey projects will post real growth of 11%.
GST authorities are using data analytics and artificial intelligence (AI) to track tax evaders, the first official said. There is intensive sharing of data among agencies such as the income-tax department, customs and the Enforcement Directorate (ED) that enables targeted action against tax cheats.
“While the pinpointed exercise has eliminated overreach on the one hand, it has made difficult for unscrupulous elements to take fake input tax credit. Thus tax leakage has been plugged to a great extent,” the official said.
MS Mani, senior director at consulting firm Deloitte India, said: “The continuing uptick in e-way bill generation in February, accompanied by the series of anti-evasion measures taken by the GST authorities, has the potential for translating into significantly higher GST collections for February.”
Rajat Bose, a partner at law firm Shardul Amarchand Mangaldas and Company, said if GST collections cross ₹1 lakh crore in February, it would be a strong indicator of sustained economic revival in the aftermath of the lockdown.
“The crackdown on fraudsters and evaders and constriction of credit availment provisions also has a large role to play in increasing compliance and ensuring timely payment of GST. This will also be a confidence booster for global investors and they will be looking to fast-track their India investment plans, which had taken a back-seat in the last year,” he said.