The goods and services tax (GST) collections in July stood lower than the previous month and were 86 per cent of the levels seen in the same month last year as economic activity limps back to normalcy with the unlocking process picking pace. The mop up remained well under the Rs 1 trillion mark for the fifth straight month with the economy reeling under the pandemic shock.
The GST collections stood at Rs 87,422 crore in July compared to Rs 90,917 crore in June, data released by the ministry of finance showed on Saturday. The collections are in fact, 14.6 per cent lower than July last year, when the mop up was a robust Rs 1.02 trillion. In order to improve collections, the government is looking to introduce more anti-evasion measures including e-invoicing for large firms with turnover of Rs 500 crore from October 1.
“The revenues for the last month were higher than the current month. However, it is important to note that during the previous month, a large number of taxpayers also paid taxes pertaining to February, March and April 2020 on account of the relief provided due to Covid-19,” the ministry of finance explained in an official release. It may also be noted that the taxpayers with turnover less than Rs 5 core continue to enjoy relaxation in filing of returns till September 2020, it further noted.
Compensation cess collection improved was slightly lower than last month at Rs 7,265 crore in July compared to Rs 7665 crore in June. The GST Council is expected to meet sometime in August to settle an alternative compensation mechanism as cess collections remain inadequate.
The revenues from import of goods were 84 per cent of the levels seen in July last year, whereas those from domestic transactions were 96 per cent of the last year levels
“Imports still seem to be lower than domestic output. This augurs well for the Government and collections are likely to improve further as lockdown is eased progressively. Industry can perhaps hope for some more GST relief, particularly in form of liquidity support as they navigate through the slowdown,” said Pratik Jain, partner, PwC India.
Central GST collection stood at Rs 39,467 crore as against Rs 32,305 crore in June. State GST collection was Rs 40,256 crore, higher than Rs 35,087 crore in the previous month. The integrated GST mop-up was also higher at Rs 42,592 crore as against Rs 40,302 crore in the previous month.
Abhishek Jain, Tax Partner, EY said that a collection approximate to 86 percent of last year does showcase quite a significant economic recovery from the pandemic though a bit of it could be on account of pent up demand. “With economic activities increasing, the collections should hopefully witness aligning with estimates soon", he said.
M. S Mani, partner, Deloitte India said that the progressive unlockdown steps taken by various states in June are reflected in the improvement in GST collections for July although the figures also includes some transactions in respect of earlier months.