However, the central and state portions remained subdued, posing a challenge for the revenue target for the financial year.
GST collection at Rs 1.02 trillion in the month was slightly more than 2 per cent higher than the Rs 99,939 crore in June and 5.8 per cent higher than the Rs 96,483 crore in July last year. However, Central GST collection was just Rs 17,912 crore in July, down from Rs 18,366 crore in June.
State GST collection too was lower at Rs 25,008 crore in the month against Rs 25,343 crore in June.
It was the IGST that rose to Rs 50,612 crore against Rs 47,772 crore in this period.
Subdued revenue collection poses challenges for Finance Minister Nirmala Sitharaman with a growth target of 16 per cent for the central GST in 2019-20, reinforcing the need for emphasis on data intelligence and policies to plug leakages.
The CGST collection target was revised downwards to Rs 5.26 trillion for the fiscal year from the Rs 6.1 trillion estimated in the Interim Budget, following a 9 per cent shortfall in collection in the previous year.
“GST collection for the month, despite being more than Rs 1 trillion, would be a matter of concern because this is lower than the Budget estimate. Collection needs to be correlated to the economic situation,” said M S Mani, senior director, Deloitte India.
The government is working on measures to stop tax evasion — including data analysis, new return formats, the e-way bill, the proposed e-invoicing system, and mandatory e-ticketing for movie theatres.
Abhishek Jain, tax partner, EY, said: “The next uptick in collection is expected with the launch of the new return formats and related restricted credit availability only on the matching of it with corresponding disclosures by suppliers, and verification of annual returns/audit reports submitted for FY17-18, etc.”
The compensation cess stood at Rs 8,551 crore, a shade higher than the Rs 8,457 crore in June.
A total of 7.579 million GSTR-3B, or summary returns, were filed in July, higher than the 7.425 million in June.
A sum of Rs 17,789 crore has been released to the states as GST compensation for April-May 2019.
The lower than expected collection weakens the case for further reduction in GST rates, especially for items taxed at 28 per cent.
In the GST Council meeting last week only a single segment — electric vehicles (EVs), EV chargers, and hiring EV buses — was considered for rate reduction. The rate for EVs was cut from 12 per cent to 5 per cent, and that for chargers from 18 per cent to 5 per cent. Hiring buses got an exemption.
Tax evasion may get tougher with the GST Network (GSTN) and the income-tax department signing a memorandum of understanding to facilitate an exchange of data.
The GST Council in its December 2018 meeting cut the GST rates for 23 goods and services, including movie tickets, TVs and monitor screens, and power banks, and exempted frozen and preserved vegetables from the levy.
The rates for consumer durables such as small-screen TVs, refrigerators, and washing machines were cut to 18 per cent from 28 per cent in July last year.
In November 2017, the rates for 178 items, including detergents, shampoos and beauty products, were reduced from 28 per cent to 18 per cent.