At Rs 1.24 lakh crore, March GST mop-up a new record

Gross goods and services tax (GST) collections came in at Rs 1,23,902 crore in March (February sales), the highest monthly mop-up since the tax’s launch in July 2017, and up 27% over the year-ago month, according to official data released on Thursday.

GST collections being above the Rs 1-lakh-crore mark for the sixth month in a row and being above the year-ago levels for the seventh consecutive month reflected the economy’s resilience. Indeed, a part of the incremental revenue could be ascribed to stronger anti-evasion steps and a shift in business away from the informal sector.

While other high-frequency data including core sector output and exports recorded in February don’t quite corroborate the fast-paced recovery and higher transaction volumes suggested by GST collections, the relatively higher growth in GST revenues from import of goods in recent months – up an impressive 70% on year in March – is proof that Corporate India has been on a reset mode. The worry is if the second Covid wave has disrupted the uptick.

For the government, the acceleration in GST receipts could boost its tax revenue; along with the pick-up in corporate and personal income tax receipts, the higher central GST (C-GST)receipts mean that tax revenue for FY21 will be much higher than the revised estimate (RE) announced in the Budget on February 1.

According to a recent estimate by FE, the Centre may rake in additional net (post-revolution) tax receipts of around Rs 1.2 lakh crore in FY21 over the RE of Rs 13.4 lakh crore. As the finance ministry said on Thursday that the Centre has released Rs 45,000 crore as additional devolution to states in FY21, up 8.2% over RE, it was in sync with the estimate.

Of the gross GST collections in March, CGST was Rs 22,973 crore, while state GST and I-GST stood at is Rs 29,329 crore and Rs 62,842 crore, respectively. The compensation cess collection was Rs 8,757 crore.

“The government has settled Rs 21,879 crore to CGST and Rs 17,230 crore to SGST from IGST as regular settlement. In addition, Centre has also settled Rs 28,000 crore as IGST ad-hoc settlement in the ratio of 50:50 between Centre and States/UTs. The total revenue of Centre and the states after regular and ad-hoc settlements in March is Rs 58,852 crore for CGST and Rs 60,559 crore for the SGST. the Centre has also released a compensation of Rs 30,000 crore during the month of March 2021,” according to an official statement. The CGST collected in March was much higher than the average monthly mop-up in the year; the RE for Centre’s GST receipts in FY21 is just Rs 5.15 lakh crore, as against the initial estimate of Rs 6.9 lakh crore.

The previous peak in GST collections was Rs 1,19,875 crore in January (December transactions). 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.

“Closer monitoring against fake-billing, deep data analytics using data from multiple sources including GST, income tax and customs IT systems and effective tax administration have also contributed to the steady increase in tax revenue over last few months,” the government said.

The output of eight infrastructure sectors shrank 4.6% in February with coal, crude oil, natural gas, refinery products and fertilisers reporting decline. Similarly, growth in merchandise exports slowed to 0.7% on year in February from a 22-month peak of 6.2% in January. Core imports, which is an indicator of investment demand, grew 9.5% in December and 8.4% in January, indicating companies had indeed planned to reboot, but the growth fell to 6.5% in February.