Goods and services tax (GST) revenue collections slipped to the lowest level in the current financial year to Rs 93,960 crore in August (for July) this year, from Rs 96,483 crore in the previous month, the finance ministry said in a statement on Saturday. The compliance rate, however, inched higher with 67 lakh assessees filing their summary sales GSTR-3B return in July (for June), compared with 66 lakh returns filed a month ago. GST revenue collections in the first month of its roll-out of July 2017 (collected in August) had stood at Rs 93,590 crore.
The ministry attributed the reasons for decline in GST revenue collections to seasonal factors as well as a probable deferment of purchases by consumers after rate cuts were announced by the GST Council on July 21, which were to be effective from July 27.
Though the August collection were above Rs 90,000 crore, it remained 6.4 per cent below the desired monthly average mark of Rs 1 lakh crore. In April this year, the GST collections were over Rs 1.03 lakh crore, while the average for July 2017-March 2018 was Rs 89,885 crore.
“One of the main factors for the dip in tax revenues is probable postponement of sale of items for which tax rate was reduced by the Council as the decision to reduce the tax rate was taken in meeting held on July 21 while the notification of the reduced rate came into effect only from July 27, 2018,” the finance ministry statement said.
The ministry also said that since it would have taken some time for the market to pass on the benefit of reduced taxes, consumers would have postponed their decision to buy expecting the benefit. “The actual impact of reduction of rate of taxes would be observed only from next month onwards as the rate reduction would have got affected only in last few days of the month,” it said.
Also, the ministry cited past trend of indirect tax collections to say that while July collections are 8.2 per cent of the total annual collections, August collections are at a lower level of 7.7 per cent of the total annual collections. “This is another reason for lower collections during the month of August as compared to that in July,” it said.
Tax experts said the revenue trend for coming months will be better on account of data mining and government scrutiny. Abhishek Jain, Tax Partner, EY said, “While there has been a small dip in the revenue collections vis-a-vis the trend in the past months essentially on account of the reduced rate of tax, with data mining and scrutiny at Government’s end, the upward trend should be in place soon.”