The Goods and Services Tax (GST) revenue collections in December marked a rebound to touch Rs 86,703 crore (till January 24), reversing the sliding trend of last two months, the Ministry of Finance said in a statement on Thursday.
Though the December collections still remained 4.7 per cent below the monthly target of Rs 91,000 crore and 7.8 per cent lower than Rs 94,063 crore collected for July (as on August 31), the rise in GST revenue assumes significance as it was for the first full month after the rate cut on over 200 items, effective from November 15.
The rise in GST mop-up for December is expected to bring some relief for the government’s finances on the indirect tax front. The numbers could offer a pointer to the collections under the new indirect tax regime in December, shows trend being reversed entering a stabilisation phase and broader compliance improving on account of the rate cuts. With several other measures such as the e-way bill lined up, the collections will only increase in future months.
Incidentally, for the first time since the July 1 rollout of the new indirect tax regime, the Finance Ministry did not detail the GST revenue breakup for Central GST (CGST), State GST (SGST), Integrated GST (IGST) and the compensation cess collections for month of December, as was stated in earlier monthly GST revenue releases.
The GST revenue collections from the composition scheme dealers also increased for the October-December quarter to Rs 421.35 crore as against Rs 335.86 crore collected during the July-September quarter. However, the GST revenue under the composition scheme accrued only from 9.25 lakh taxpayers or 54 per cent of the total 17.11 lakh registrants under the composition scheme. Overall, the total registrants under GST reached the one-crore mark (till January 24), the statement said.
In December, 56.30 lakh GSTR-3B returns were filed till January 24. This means, excluding 17.11 lakh composition scheme dealers-who are required to file GST returns quarterly instead of monthly-out of total 1 crore registrants, the tax compliance rate was 56.3 per cent only. The low compliance rate was also reflected in the composition scheme.
“A total of 9.25 lakh returns were filed by composition dealers for October-December quarter paying a sum of Rs 421.35 crore as GST. A total of 8.10 lakh returns were filed for July-September quarter by composition dealers paying a total of Rs. 335.86 crore as GST,” the Ministry said.
The GST collections had been declining since October, with the mop-up for November slipping to Rs 80,808 crore (as on December 25), the lowest since the July 1 implementation of the indirect tax regime. The government had garnered Rs 83,346 crore as total GST revenue for October (as on November 27), Rs 92,150 crore for September (as on October 23), Rs 90,669 crore for August (as on September 26) and Rs 94,063 crore for July (as on August 31).
Tax experts said that the rise in December’s GST collection reflects stabilisation as transition issues are waning out and are expected to improve in the coming months.
Pratik Jain, Leader-Indirect Tax, PwC said, “Increase in revenue collection is on expected lines and means that gradually GST is stabilising and impact of transition issues is waning out. This, coupled with few anti-evasion measures being taken by government now, is likely to result in further increase of revenues in January-March 2018 quarter.”
Others pointed out that revenue mop-up under GST is likely to get a further boost due to implementation of anti-evasion measures such as e-way bill.
M S Mani, Senior Director, Deloitte India said: “It appears that GST collections have started entering the stabilisation phase and are now expected to improve in the coming months. A combination of reasonable rates and easier compliance processes during December would also have contributed to the improvement in collections. The December collections could become the much needed tipping point in the GST history. With several other measures such as the e-way bill lined up, the collections would only increase in future, removing fears of an increase in the fiscal deficit.”
In its 25th meeting held on January 18, the GST Council had focused on anti-evasion measures such as imposition of reverse charge mechanism (RCM) for composition scheme dealers along with the e-way bill rollout from February 1. Along with mandatory e-way bill rollout for inter-state movement of goods exceeding in value of Rs 50,000 km and 10 km in travel for all states from February 1, 15 states have also agreed for intra-state e-way bill rollout from the same date, Finance Minister Arun Jaitley had said. He had also said that with all anti-evasion measures in place, GST collections would “pick up”.
The government had earlier cited deferment of implementation of some of the main features of GST such as, matching of returns, e-way bill and reverse charge mechanism as the reasons for low compliance under the indirect tax regime. After a meeting in December, the GST Council had then approved February 1, 2018 as the date for e-way bill system for inter-state movement of goods across the country as against the earlier deadline of April 1. The Council had also approved June 1 as the date for implementation of e-way bill mechanism for both inter-state and intra-state movement of goods.