Goods and services tax collections fell below the Rs 1-trillion mark for the first time in nine month in June to a 10-month low, as economic activity got disrupted due to the second Covid-19 wave, official data showed. However, experts say the collections are better than expected and will provide a cushion to the government to ramp up spending, going forward.
GST collection stood at Rs 92,849 crore in June compared with Rs 1.02 trillion the previous month and a record high of Rs 1.41 trillion in April, data released by the ministry of finance showed on Tuesday. These figures pertain to transactions done in May, but collected in June. The collections in May are 2.1 per cent higher than the corresponding month of last year when the national unlocking process began after two months of intense movement curbs due to the pandemic. Meanwhile, this May saw localised lockdowns across the country due to the devastating second wave.
The collections in June are on expected lines as e-way bill generation, which indicates supply in the economy, declining to a one year low level average of 1.2 million per day in May.
“During May, most of the States/UTs were under either complete or partial lock down due to COVID. The e-way bill data for the month of May 2021 shows that during the month, 39.9 million e-way bills were generated as compared to 58.8 million in the month of April 2021, down by more than 30 per cent,” said ministry of finance in a statement. “…Thereafter, the average generation of e-way bills has been increasing and has reached again to 2 million level since week beginning 20th June. Therefore, it is expected that while the GST revenues have dipped during the month of June, the revenues will see an increase again from July 2021 onwards,” it added.
The e-way bills generated during June have recovered to 55 million on account of reduction in caseload and easing on lockdowns, “which indicates recovery of trade and business.”
The GST collections pertain to domestic transactions between June 5 and July 5, as taxpayers were provided relief in the form of waivers and reduction in interest on delayed return filing for 15 days for the return filing month June for those with turnover of up to Rs 5 crore in the wake of the second Covid wave.
Aditi Nayar, chief economist, Icra Ratings said that the pace of moderation of GST collections was muted as compared to the extent by which the GST e-way bills had fallen in the corresponding period (May 2021 vs April 2021) as state-level restrictions had widened. “Despite declining to a 10-month low, the June 2021 GST collections provided a positive surprise, said Nayar.
Moreover, GST collections in Q1FY22 are higher than the pre-Covid level of Q1FY20. This will buffer the revenue situation of the Centre and states, which should support a ramping up of expenditure going ahead, added Nayar.
“…Considering the fact that the collections relate to transactions in May 2021, which were badly impacted by the pandemic, it would be considered as a very satisfactory collection. These numbers also reflect the economic resilience shown during the recent pandemic phase,” said MS Mani, Senior Director, Deloitte India
Key segments of GST collections yielded less in June than in May. For instance, Central GST collections stood at Rs 16,424 crore as against Rs 17,952 crore in May. State GST mop was Rs 20,397 crore as against Rs 22,653 crore in May. Compensation cess was sharply lower at Rs 6,949 crore compared to Rs 9,265 in May.
This month, the government settled Rs 19,286 crore to CGST and Rs 16,939 crore to SGST from IGST as regular settlement.
In addition, the government has also done a regular integrated GST settlement of Rs 19,286 crore to CGST and Rs 16,939 crore to SGST.
The government has also been managing robust GST collections due to tightened enforcement through 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. Easier compliance also encouraged return filing.
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