Goods and services tax (GST) revenue touched an all-time high in March, with the government collecting nearly Rs 1.24 trillion. It surpassed the Rs 1-trillion mark for the sixth straight month, and remained over the Rs 1.1-trillion mark for the fourth time in a row, revealed the government’s provisional data on Thursday.
With this, the net tax collection is likely to have exceeded the Revised Estimates (RE) for the fiscal year, resulting in a fiscal deficit lower than 9.5 per cent of gross domestic product estimated for 2020-21 (FY21).
The government has attributed the robust mop-up to closer monitoring against fake billing, deep-data analytics using data from multiple sources, including GST, income-tax and Customs information technology systems, and effective tax administration.
At Rs 1.24 trillion, GST collection grew nearly 27 per cent during the month, compared to collection worth Rs 97,590 crore in March last year. The collection was 9.5 per cent higher, compared to Rs 1.13 trillion in the previous month, said the finance ministry. This is in line with the trend of recovery in GST revenue over the past five months, GST revenue in March 2021 is the highest since the introduction of the indirect tax reform (on July 1, 2017.) GST revenue crossed the Rs 1-trillion mark at a stretch for the last six months.
A steep increasing trend over this period is a clear indicator of rapid economic recovery after the pandemic, the Ministry of Finance said in a release.
GST revenue witnessed growth rate of minus 41 per cent, minus 8 per cent, 8 per cent, and 14 per cent in the first, second, third, and fourth quarters of this fiscal year, respectively, compared to the same period last year, clearly indicating the trend in recovery of GST revenue, as well as the economy as a whole, it said.
Aditi Nayar, principal economist, ICRA Ratings, said, “The healthy GST collection in March, along with the additional devolution of Rs 45,000 crore to the state governments for the just-concluded fiscal year, confirms our view that the tax revenue in FY21 has exceeded the RE. We continue to expect the fiscal deficit to undershoot the FY21 RE of Rs 18.5 trillion, suggesting ample cash balances at the start of 2021-22.”
During the month, revenue from the import of goods was 70 per cent higher; revenue from domestic transactions (including import of services) was 17 per cent higher than the revenue from these sources during the same month last year.
The government in October had introduced the e-invoicing mechanism for firms with a turnover of Rs 500 crore and above. An anti-evasion measure, e-invoicing was extended to entities with a turnover of Rs 100 crore from January 1 this year and further to entities with a turnover over Rs 50 crore from April 1.
The government also made registration norms more stringent while tightening the rules for using tax credits.
Central GST (CGST) collection rose to Rs 22,973 crore, from Rs 21,092 crore in February. State GST (SGST) mop-up was Rs 29,329 crore, against Rs 27,273 crore in the previous month. However, the compensation cess was lower at Rs 8,757 crore, against Rs 9,525 crore in February. In addition to the trend of higher overall GST collection over the past six months, all major states have shown a significant increase, compared to the previous year. Further the increase in collection on imports, accompanied by an increase in domestic transactions, would indicate that the overall production /consumption cycle is back to normal,” said M S Mani, senior director, Deloitte India.