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Sitharaman reduces FY20 GST collection estimate by 13% to Rs 6.63 trillion

Sitharaman slashes FY20 forecasts by 13% from Goyal's February Budget Estimates

Indivjal Dhasmana 

Finance Minister Nirmala Sitharaman Photo- Sanjay K.Sharma
Finance Minister Nirmala Sitharaman. Photo: Sanjay K.Sharma

Finance Minister Nirmala Sitharaman has substantially lowered her projections for goods and services tax (GST) collections in the Budget for 2019-20 (FY20), against the interim Budget Piyush Goyal presented in February.

In a span of five months, the mop-up for FY20 has been reduced by around 13 per cent to Rs 6.63 trillion in Sitharaman’s Budget, against Rs 7.6 trillion estimated by Goyal.

The collection target was cut despite the fact that the first two months of the current fiscal year yielded over Rs 1 trillion and the third month — June — delivered close to Rs 1 trillion.

The annual numbers given in the Budget include the Centre’s share (central GST, or CGST), the integrated GST, when goods move from one state to another, but excludes the state’s share. The monthly collection figures, however, include the state

Realisation from CGST, which is the main portion of the GST collections in the Budget, was lowered by almost 13 per cent at Rs 5.26 trillion in the final Budget, compared to February’s interim Budget.

The projections were reduced since the government could not collect the amount for 2018-19 (FY19) that was estimated in the interim Budget. Against Rs 6.10 trillion CGST collections that were estimated, only Rs 4.57 trillion could be collected in FY19. This has pulled down the overall GST collections in the Union government’s account to Rs 5.79 trillion in FY19, against Rs 7.61 trillion in the Revised Estimates for the year in the interim Budget.

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Keeping the original target for FY20 would have meant a 31.4 per cent rise in tax collections against the actual collections. Realising it is an insurmountable target, Sitharaman opted for 14.5 per cent growth. The government, meanwhile, came out with a scheme for faster resolution of disputes to collect money from pre-GST-era litigation.

“Soon realising that the GST targets announced in the Budget were high, the finance minster acted pragmatically by not only reducing the GST target but also announcing measures to cover the deficit by announcing a dispute resolution scheme to collect past dues,” said Abhishek Rastogi, partner at Khaitan & Co.

The finance minister cautioned that the GST numbers should be interpreted realistically. “GST rates have been reduced significantly, where relief of about Rs 92,000 crore per year has been given. We should not lose sight of this fact while judging the performance of GST,” she said.

Almost all the rates, however, were cut before the interim Budget of February and those could have gone in the calculation of the GST collections in Goyal’s Budget.

First Published: Fri, July 05 2019. 20:17 IST
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