Monthly GST may have topped Rs 1 lakh crore, but required run rate short by Rs 13,500 crorehttps://indianexpress.com/article/business/economy/monthly-gst-may-have-topped-rs-1-lakh-crore-but-required-run-rate-short-by-rs-13500-crore-5761636/

Monthly GST may have topped Rs 1 lakh crore, but required run rate short by Rs 13,500 crore

The widening gap between the GST revenue and the monthly target will put strain on the government to meet its total budgeted target for the 2019-20 fiscal.

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Officials say a shortfall of Rs 6,000-7,000 crore can still be met during festive season, when indirect tax revenue tends to go up, but a higher shortfall will make the overall target tough to meet.

Gross Goods and Services Tax (GST) collections have stayed above the Rs 1 lakh crore mark for the third consecutive month in May. However, the mop-up so far for this financial year is lagging behind the required run rate by around Rs 13,500 crore.

The slower trend in revenue is being seen as a reflection of the revenue loss due to change in exemption threshold, which became effective April 1, along with overall slowdown in the economy.

The widening gap between the GST revenue and the monthly target will put strain on the government to meet its total budgeted target for the 2019-20 fiscal.

Officials say a shortfall of Rs 6,000-7,000 crore can still be met during festive season, when indirect tax revenue tends to go up, but a higher shortfall will make the overall target tough to meet.

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“The monthly run rate was set factoring in the required 14 per cent growth in revenue. Change in exemption threshold and economic slowdown have started showing up in GST revenue.

“A shortfall of Rs 6,000-7,000 crore is manageable since the revenue picks up during festive season and year-end. But a shortfall higher than Rs 10,000 crore will make the overall annual target challenging,” a senior government official said.

The Centre’s target for gross GST collection for states and Centre is around Rs 1.14 lakh crore a month. The government had already missed its GST collection target for fiscal 2018-19 by almost Rs 60,000 crore, even after scaling down the Budget target by Rs 1 lakh crore.

In the Interim Budget for FY20 presented on February 1, the Centre had scaled down the GST collection target by Rs 1 lakh crore, with revised estimate for 2018-19 pegged at Rs 6.44 lakh crore as against the initial Budget target of Rs 7.44 lakh crore.

Out of the total Rs 6.44 lakh crore GST collections pegged in Budget 2018-19, the government had aimed to collect CGST of Rs 5.04 lakh crore and IGST of Rs 50,000 crore.

For the current fiscal 2019-20, the Centre has pegged GST target at Rs 7.61 lakh crore, out of which Rs 6.10 lakh crore is estimated from CGST, Rs 1.01 lakh crore from compensation cess and Rs 50,000 crore from Integrated GST. Adding states’ share, the overall target for GST revenue is around Rs 13.71 lakh crore for 2019-20, up from the target of Rs 11.48 lakh crore for 2018-19.

In its 32nd meeting in January, the GST Council had decided to double the exemption threshold to Rs 40 lakh and hike the limit for composition scheme to Rs 1.5 crore from Rs 1 crore with effect from April 1.

With the hike in exemption threshold to Rs 40 lakh, about 20.64 lakh taxpayers, including composition scheme registrants, were estimated to have the option to move out of GST regime.

The annual revenue impact of the decision was estimated to be Rs 5,225 crore, assuming that 50 per cent of registered taxpayers move out of GST.