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Monthly revenue from Goods and Services Tax (GST) for October slipped to Rs 83,346 crore, the lowest level since the implementation of the new indirect tax regime. The decline in GST revenue, especially for Centre, is primarily on account of utilisation of already collected Integrated GST (IGST) as credit against Central GST (CGST) and State GST (SGST) along with a lower tax incidence on items in the GST regime, a finance ministry release said.
About 50.1 lakh returns have been filed for the month of October till November 26, lower than 57.3 lakh returns filed for September, 58.9 lakh for August and 58.7 lakh returns for July, the release said. The government said the tax compliance may not have been up to the mark on account of deferment of implementation of some of the main features of GST such as, matching of returns, e-way bill and reverse charge mechanism. Usage of high transitional credit over cash for payment of CGST by assessees under GST has also resulted in additional revenue gap for Centre, it said.
“The tax administration of GST is now based on self-declared Tax Return, in which the assessee decides on his own how much tax liability he has and claims input tax credit as per his own calculations. Since implementation of some of the main features of GST such as, matching of returns, e-way bill as well as reverse charge mechanism have been postponed the tax compliance may not be up to the mark,” the release said.
Also, the government said there was an additional cash flow of IGST in the first three months because of the first time requirement of IGST payment on inter-state transfer of goods, even if within the same company. “As and when the final transaction of these goods takes place, the credit for IGST is being utilised for payment of SGST and CGST and therefore, the inflow of new taxes is low,” the release said.
The government had garnered Rs 92,150 crore as total GST revenue 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). 95.9 lakh taxpayers have been registered under GST so far, of which 15.1 lakh are composition dealers who are required to file quarterly returns.
Out of the total GST revenue garnered so far, including from levy of compensation cess, the Centre has released a compensation amount of Rs 10,806 crore to all the states for July-August and Rs 13,695 crore for the months of September and October. “The states’ revenues have thus been fully protected taking base year revenue as 2015-16 and providing for a projected revenue growth rate of 14 per cent,” it said.
Tax experts said the collections are likely to be hit further in the coming month when the impact of the recent reduction in GST rates for over 200 items will be reflected in the revenue collections. Abhishek Jain, Tax Partner, EY said, “It is important to note that the dip in collections does not factor the rate reduction on around 200 goods decided by the GST Council in its meeting on November 10, as that was effective only from November 15 and the impact of the same would get reflected in December. Moreover, revenues may be further impacted as the pending export related refunds in the range of about Rs 50,000 crore are disbursed by the government.”
Without detailing the SGST collections separately for October, the government said that the states have garnered Rs 87,238 crore as SGST for July, August, September and October (till November 27). The Centre has released Rs 31,821 crore to the states for July, August and September and 13,882 crore for October on account of utilisation of IGST against SGST for all inter-state trade. The total CGST revenue for July, August, September and October (till November 27) has been Rs 58,556 crore.
