GST kitty rebounds to ₹1.16 lakh crore in July
The GST revenue in July this year, which indicates the actual volume of business transactions in June, is also about 14% up.
The Goods and Services Tax (GST) collection surged to ₹1.16 lakh crore in July, a 33% year-on-year jump, signifying the easing impact of the second wave of the Covid-19 pandemic on the economy which saw the revenue plunge below ₹1 lakh crore in the previous month for the first time since October 2020.
The GST revenue in July this year, which indicates the actual volume of business transactions in June, is also about 14% up compared to ₹1.02 lakh crore collected in July 2019, pointing at rapid economic recovery after the second wave that raged in the months of April and May, according to official data.
The GST collections, after posting above ₹1 lakh crore for eight months in a row, dropped below ₹1 lakh crore in June 2021 as the collection in the month was predominantly related to business that took place in the month of May 2021, when most of the states and Union territories (UTs) were under complete or partial lockdown due to the pandemic, the finance ministry said.
“With the easing out of Covid restrictions, GST collection for July 2021 has again crossed ₹1 lakh crore, which clearly indicates that the economy is recovering at a fast pace. The robust GST revenues are likely to continue in the coming months too,” it said in a statement.
The International Monetary Fund (IMF) last week slashed India’s growth forecast for FY-22 to 9.5% from 12.5% projected in April, citing the severe second wave of the pandemic, and expected slow recovery in business confidence. Most of the professional forecasters also reduced their growth projections for India. Last month, global rating agency S&P lowered India’s GDP growth forecast to 9.5% in the current fiscal year compared to its prediction of 11% in March, which was just before the second wave.
The GST collections, which dropped for seven consecutive months from March 2020 after a 68-day nationwide lockdown since March 25 to check the first wave, showed recovery from October last year. The revenue surpassed the ₹1 lakh crore mark for eight consecutive months since October 2020. The second wave of the pandemic, however, led to the GST collections dipping below ₹1 lakh crore in June 2021. The revenue, however, bounced back quickly as there was no nationwide lockdown this year, according to experts.
Aditya Singhania, partner at consultancy firm Singhania’s GST Consultancy Co, said: “Collection during the July ’21 majorly relates to supplies taken place in June ’21 whose collection has bounced back to mark of ₹1 lakh crore, which certainly indicates the economic activities restoring steadily.”
The gross GST revenue collected in July 2021 is ₹1,16,393 crore — ₹22,197 crore central GST (CGST), ₹28,541 crore state GST (SGST), and ₹57,864 crore integrated GST (IGST), including ₹27,900 crore collected on import of goods. ₹7,790 crore was collected as the GST cess, including ₹815 crore collected on imports.
“During the month, revenue from import of goods was 36% higher and the revenues from domestic transaction (including import of services) are 32% higher than the revenues from these sources during the same month last year,” the finance ministry said.
MS Mani, senior director at Deloitte India, said: “The improvement in GST collections both on domestic transactions and imports, accompanied by the fact that major producing states have shown significant increases, would indicate that the economic activities have resumed across the country.”
According to the official data, barring Daman and Diu, Lakshadweep and Puducherry, all other states and UTs have shown positive year-on-year growth in July GST collections. The revenue of Maharashtra in July jumped 51% at ₹18,899 crore; Gujarat saw a 36% growth at ₹7,629 crore; Karnataka 12% ( ₹6,737 crore); Tamil Nadu 36% ( ₹6,302 crore); Uttar Pradesh 18% ( ₹6,011 crore) and Haryana 53% ( ₹5,330 crore).
Rajat Bose, partner at law firm Shardul Amarchand Mangaldas & Co, said the collection in July has seen a sharp uptick due to unlocking of businesses in June. “If the country is able to resist the third wave, the GST collections should increase from hereon,” he added.