The goods and services tax (GST) collections touched a record high at Rs 1.41 trillion in April, surpassing the Rs one trillion mark for the seventh straight month in a row during 2020-21. The mop up is higher than the previous record of Rs 1.24 trillion in March. These GST figures pertain to transactions in March, but collected in April. Hence, do not capture the impact of surge in lockdown instances in April across the country due to the deadlier second wave of coronavirus. However, the high growth trend is unlikely to sustain as the impact of economic activity disruption in April will reflect in May collections.
The collections remained over the Rs 1.1 trillion mark for the fifth time in a row, provisional data released by the finance ministry on Saturday showed. Till now, GST revenues have crossed Rs 1.1 trillion six times since the introduction of GST.
The robust mop up could be attributed to government's tightened compliance measures and crackdown against GST evaders and fake bills.
At Rs 1.41 trillion, the GST collections grew by nearly 24 per cent during the month compared to Rs 1.13 trillion in the same month last year. The collections were 14 per cent higher compared to Rs 1.24 trillion in the previous month.
“Despite the second wave of Covid-19 pandemic affecting several parts of the country, Indian businesses have once again shown remarkable resilience by not only complying with the return filing requirements but also paying their GST dues in a timely manner during the month,” said the finance ministry in a release.
The collections posted growth for the eighth straight month in April, indicating some reinstatement of normalcy in economic activity after months of disruption caused by the Covid-19 lockdown.
“GST revenues have not only crossed the Rs 1 lakh crore mark during successively for the last seven months but have also shown a steady increase. These are clear indicators of sustained economic recovery during this period,” said the release.
Source: Ministry of Finance
"The government attributed robust mop up 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. “The quarterly return and monthly payment scheme has been successfully implemented bringing relief to the small taxpayers as they now file only one return every three months. Providing IT support to taxpayers in the form of pre-filled GSTR 2A and 3B returns and ramped up System capacity have also eased the return filing process,” the government release added.
During the month, the revenues from domestic transaction (including import of services) are 21 per cent. higher than the revenues from these sources during the last month.
Key segments of GST collections yielded more in April compared to March. For instance Central GST collections rose to Rs 27,837 crore from Rs 22,973 crore in March. State GST mop was Rs 35,621 crore as against Rs 29,329 crore in the previous month. However, compensation cess was higher at Rs 9445 crore as against Rs 8,757 crore in March.
In addition to regular settlement of Rs 51,941 crore as integrated GST settlement, Centre has also done ad-hoc settlement of IGST in the ratio of 50:50 between Centre and States/UTs resulting in Rs 57022 crore for CGST and Rs 58377 crore for the SGST.
M.S Mani, Senior Director, Deloitte India said that the all-time high collections which relates to supplies made in March 21 could now give way to muted collections in the coming months due to the lower economic activities in April.
Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co. pointed out that during the year end, most companies close their books and raise invoices during the financial close. “That is perhaps one of the reasons for the spurt in GST collections in April. The real challenge lies ahead as most parts of the country are again in a lockdown and most industries are temporarily shut,” he said.
The government started with e-invoicing for entities with a turnover of Rs 50 crore and above from April 1, which may further help increase compliance and improved collections. The government in October introduced an e-invoicing mechanism for firms with a turnover of Rs 500 crore and above. An anti-evasion measure, e-invoicing was expanded to entities in phases.
The government has also made registration norms more stringent while tightening the rules for using tax credits recently.
Abhishek Jain, tax Partner, EY, said: "The all time high GST collections are extremely encouraging and seem to be the outcome of uptick in economic recovery; anti evasion measures of the Government like e invoicing, data analytics led investigations and also year end audit and financial closure of the companies as on March 2021. However, with certain parts of the country facing lockdown due to the surge in Covid cases, the collections may experience a decline in the coming months."