Green shoots of recovery? GST mop-up improves in June, crosses Rs 90,000 cr

However, the rate of decline has come down considerably to just 9.02 per cent from 38.17 per cent in May and 71.63 per cent in April

Goods and services tax (GST) collections got a leg-up in June with the mop-up of Rs 90,917 crore, as against Rs 62,009 crore in May and just Rs 32,294 crore in April.

Returns for previous months were filed in June, following a relaxation in the deadline, which led to the surge in collections.

The June figure — 46 per cent higher than May and 181 per cent over April — also signalled some green shoots appearing in the economy after the partial lifting of the lockdown. It came on a day when the GST regime entered its fourth year. The government had not released the figures for April and May earlier as return filing dates were extended.

“The increase in collections during June is an indication of the economy recovering slowly. However, it is important to note that many companies paid their GST dues for March, April and May in June due to the moratorium extended by the government,” said Rajat Bose, partner at Shardul Amarchand Mangaldas & Co.

On a year-on-year basis, collections in June contracted for the third month in a row, shows finance ministry data. But, the rate of decline reduced considerably to just 9.02 per cent, compared to 38.17 per cent in May and 71.63 per cent in April.

GST revenues in June were 91 per cent of the Rs 99,940 crore collected in June 2019. 

“While the entire collection does not necessarily relate to transactions in May, the buoyancy shows that businesses are picking up,” said Pratik Jain, partner and leader (indirect tax), PwC India. 

Abhishek Jain, tax partner at EY, said collections should only increase from now. “It would be interesting to watch the trend in collections from now,” he said.

The government has said taxpayers still have time to file returns for May. This means that the July figures may also see a jump.

The upswing indicates recovery, which could be due to two reasons. First, the pent-up demand resulting in economic traction, and second, the payment of consolidated taxes for previous months, said Harpreet Singh, partner, KPMG.

Compensation cess stood at Rs 7,665 crore in June, higher than the Rs 7,010 crore combined for April and May. However, this will aggravate states’ woes. The Budget has pegged compensation cess at Rs 1.1 million for FY21, which means a little over Rs 9,000 crore a month.

As much as Rs 18,980 crore was collected from the Central GST component in June, with Rs 23,970 crore coming in from state GST, and Rs 40,302 crore from integrated GST.

The government settled Rs 13,325 crore to CGST and Rs 11,117 crore to SGST from IGST as part of the regular settlement. Following this, the Centre got total tax of Rs 32,305 crore, while states received Rs 35,087 crore for June.

There are wide variations in terms of GST collections state-wise. “Some states like Punjab, Rajasthan, Bihar, Sikkim, Assam, MP, Chhattisgarh, Karnataka, Andhra Pradesh, Telangana, along with Andaman and Nicobar, have surpassed last year’s collection.