GST revenue may exceed Rs 1 lakh crore for third consecutive month
Goods and Services Tax (GST) collections in December are expected to exceeded Rs 1 lakh crore for the third consecutive month, signifying sustained recovery in business activity. Revenue from the tax on consumption has been on an uptrend after staying in contraction mode for six months in a row since March because of the Covid-19 pandemic and the 68-day nationwide hard lockdown.
According to available data so far, GST collections look good, with increased demand from consumers in the festive season, two officials with direct knowledge of the matter said, requesting anonymity. The finance ministry will release GST revenue data on Friday.
“Even key economic indicators point towards a sustained recovery. GDP (gross domestic product) numbers for the second quarter is quite encouraging compared to the previous quarter. This improvement will be reflected in the GST revenues,” one of the officials said.
EY India chief policy advisor DK Srivastava said, “The high frequency indicators have been showing a slow but sustained turnaround.” India’s GDP contraction moderated sharply at 7.5% in the second quarter of 2020-21 compared to 23.9% in the preceding quarter. The Purchasing Managers’ Index (PMI) for manufacturing remained high at 56.3 in November, while PMI services was at 53.7 in November. An index of over 50 in PMI indicates expansion.
Reflecting the trend, GST collections have shown positive growth since September. While GST revenue in September could not cross the Rs 1 lakh crore benchmark, it still saw a 4% growth to Rs 95,480 crore that month compared to a year ago. Revenue collection in October saw an impressive 10% year-on-year growth to Rs 1,05,155 crore. And collections in November also saw a 1.4% year-on-year growth to Rs 1,04,963 crore.
Rajesh Gupta, co-founder and director of accounting software firm Busy Infotech, expects GST collection in December to exceed the November figure of Rs 1,04,963 crore.
But he cautioned that the demand could decline after the festive season. “Government should take measures in advance to support businesses post festive season because sustaining the collections in the months of February and March will be a real challenge,” he said.
Archit Gupta, founder and chief executive officer (CEO) of the financial technology platform ClearTax, said, “GST collections for December 2020 are expected to remain stable at current levels due to the ongoing festive and holiday season. Further, the implementation of the e-invoicing system since October 2020 will continue to scale the numbers. The system curbs fake invoicing and (fake) input tax credit menace to a greater extent.”
Gupta added that the December number could also benefit from a backlog. “To some extent, tax payments via Form DRC-03 while filing GST annual returns for FY 2018-19 & FY 2019-20, due by 31 December , may contribute to the revenue coffers,” he said.
Form DRC-03 is a digital intimation of payment made by the taxpayer voluntarily or made against a show cause notice issued by authorities.