Despite the Centre paying states the compensation due to them on account of shortfall in goods and services tax (GST) collection, worries are far from over on the revenue front.
GST collection contracted for two consecutive months of September (2.7 per cent) and October (5.3 per cent), while November collection showed an uptick of 6.5 per cent (Chart 1).
Experts have noted that this uptick was due to one-off seasonal sales in October. Further, the extent to which companies can use input-tax credit was reduced for November.
Aside from disappointing collection in September, the number of monthly returns filed actually dipped in October, which is rare (Chart 2). November collection at Rs 1.04 trillion — though a breather — still remained below the required rate of Rs 1.15 trillion per month.
An analysis of data presented in the Parliament shows that states received more revenue than they deserved due to higher transfers of Integrated GST (IGST) in FY19 (Chart 3).
This was mostly due to the ad hoc settlement. Adjustment to Centre’s coffers was done this fiscal majorly in August when CGST account got an accrual of Rs 68,545 crore (Chart 4), almost twice the normal monthly collection.
Thus, Centre’s GST growth at this point of time stands at nearly 8 per cent, but that of states is near stagnant, due to consumption slowdown.
This had necessitated a higher compensation to states, so much so that the compensation needed (released) now increasingly exceeds compensation cess collection (Chart 5).
Also, IGST collection on imports shows a disturbing trend with a fall for four consecutive months (Chart 6).
This is indicates slowdown in imported items.
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines.
Compiled by BS Research Bureau