The country’s gross GST (goods and services tax) revenue crossed the ₹1.3 lakh crore mark in October, the second highest collection since the tax regime came into force in July 2017.
The Union Finance Ministry said this reflects a recovery in economic activity and ‘would have been higher still if sales of cars and other products were not affected due to disruption in the supply of semi-drivers’.
October’s GST kitty was 24% higher than the corresponding month a year ago and 36% higher than the pre-pandemic levels of 2019. This was largely driven by a 39% year-on-year increase in collections from imports of goods, while domestic transactions. And the import of services was 19% higher as compared to October 2020.
ICRA Chief Economist Aditi Nair attributed the good growth in revenue in October to “pre-festival stocking and better compliance”. He added that the challenges of semiconductor supply may continue to hamper the collection of GST Compensation Cess.
The highest ever GST collections of Rs 1.4 lakh crore were recorded in April this year, which the ministry insisted were related to ‘year-end revenues’, which are more than the recovery of the previous month’s inflows. Was seeking to isolate as a strong signal. It cited several data points, including an increase in e-way bills and the amount of taxable value, as “clearly indicative of recovery in economic activity”.
compliance level up
The increase in compliance levels in recent months has also raised the GST kitty, with the ministry showcasing the same again with a chart showing improvements in timely filing of GST returns by taxpayers.
“Apart from taking action against individual tax evaders, this is an outcome of the multi-pronged approach adopted by the GST Council,” the ministry said in a statement.
This includes measures to ease compliance, ‘blocking e-way bills for non-filing of returns’ combined with steps like discouraging non-compliance behaviour, system-based suspension of registration of taxpayers who are required to file six consecutive returns. and block credit for return defaulters’.
The gross GST revenue of ₹1,30,127 crore includes ₹23,861 crore as Central GST, State GST of ₹30,421 crore and Integrated GST of ₹67,361 crore (including ₹32,998 crore collected on import of goods). The GST Compensation Cess collected in the month was ₹8,484 crore, which included ₹699 crore received on import of goods.
“With the October 2021 GST e-way bill expected to exceed the level seen last month, headline GST collections are set to remain healthy in the range of ₹1.25-1.35 lakh crore in November”, Ms Nair said.
According to MS Mani, Senior Director, Deloitte India, if the GST collections strengthen in the coming months, there is a possibility that the government may collect more than expected this year. “This will provide some financial space to absorb the increased health care costs,” he said.
revenue growth of states
Among the more industrialized states, Gujarat and Maharashtra recorded revenue growth of 25% and 23%, respectively. Karnataka saw a growth of 18%, while Tamil Nadu and Haryana, with a large auto industry presence, registered a more slow growth of 11% and 3%, respectively. The populous states of Uttar Pradesh and Bihar saw healthy growth of 24% and 34% respectively, while Odisha recorded a sharp 49% growth in revenue.
It was only Arunachal Pradesh and Uttarakhand that reported a decline of 52% and 1% respectively in GST revenue during the month, while the revenue for Himachal Pradesh was unchanged from a year ago. Among the Union Territories, Puducherry (-6%), Dadra and Nagar Haveli (-5%) as well as Daman and Diu recorded negative growth, which saw a sharp decline of 99% in revenue.
Abhishek Jain, Tax Partner, EY India said, “With the ongoing festive season, we can expect similar or even higher GST collections in the coming months.”
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