Even as monthly revenue from the goods and services tax (GST) topping a record Rs 1.06 lakh crore in March helped meet the combined target for the Centre and the states, the Centre’s GST mop-up fell short of the target outlined in the Budget.
While the Centre’s GST revenue is estimated to be less by around Rs 70,000 crore from the revised estimate for 2018-19, on the direct tax front, the collections are learnt to have slipped by around Rs 30,000-35,000 crore. This mounts fresh pressure on the government’s attempts to meet its fiscal deficit target of 3.4 per cent of the GDP.
Nudges to state governments for pushing large taxpayers, apart from the usual trend of nudging public sector companies on the direct tax side and utilisation of unused compensation cess funds, alongside the use of data analytics to track down tax evaders on the indirect taxes front, were some of the measures adopted by government to inch closer to its collection targets in the last two days of the 2018-19 financial year, several tax officials said. The tax collection numbers, especially of the direct taxes and excise, are still being finalised as some of the payments will take time to reflect from the banking channel to the accounts, they said.
“The record collection in March, 2019 of the GST touching Rs 1,06,577 crore indicates the expansion in both manufacturing and consumption,” Finance Minister Arun Jaitley in a tweet said.
As per the Controller General of Accounts (CGA) data for April-February, the central government collected Rs 4,11,344 crore as Central GST (CGST), Rs 26,607 crore as Integrated GST (IGST) and compensation cess of Rs 86,906 crore. Adding the March collection figures to these yields CGST revenue of Rs 4.6 lakh crore and compensation cess of Rs 95,192 crore, while officials said the Integrated GST (IGST) revenue after settlement stood at Rs 19,000 crore, taking the overall GST collection for Centre to Rs 5.74 lakh crore as against the revised budget estimate of Rs 6.44 lakh crore — a shortfall of about Rs 70,000 crore.
Government finances are already under strain with the fiscal deficit for April-February 2018-19 touching 134.2 per cent of the revised estimate. Direct tax collections are also likely to fall short of the revised estimate of Rs 12 lakh crore, with collections expected to be about Rs 11.6-11.7 lakh crore. As on March 23, the government had collected only Rs 10.21 lakh crore, which is 85.1 per cent of the revised estimate, following which the tax department had sent letter to field formations to boost the revenue collections. Officials said some compression of government expenditure and savings from the rollout of the PM-Kisan scheme will be crucial for meeting the fiscal deficit target.
Shortfall in overall collection may impact govt’s fiscal math
The March 2019 GST collections marks the fourth month when collections exceeded Rs 1 lakh crore. But overall collection for the year ended March 2019 points to a shortfall, which could impact the government’s fiscal math. For FY20, the central government has budgeted for over 21 per cent increase in central GST and nearly 25 per cent growth in combined GST. Unless, pace of growth of GST collections, as seen in 3QFY19 and 4QFY19, speeds up, it might be tough to achieve the budgeted GST collections for this fiscal.
In the Union Budget for 2019-20 presented on February 1, the government had already 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 pegged Rs 6.44 lakh crore GST collections, the Centre had aimed to collect CGST of Rs 5.04 lakh crore and IGST of Rs 50,000 crore. In theory, IGST is supposed to be equally divided between Centre and the states. Adding State GST (SGST) collections equivalent to CGST would mean the total GST collections for both states and Centre was pegged at Rs 11.48 lakh crore as against Rs 13.48 lakh crore estimated earlier.
For the next fiscal, 2019-20, the GST collection target has been budgeted at Rs 13.71 lakh crore, which as per officials is an equally steep target to meet. GST collections have been under strain due to the slew of relief measures and rate cuts that have been estimated to create a dent of Rs 80,000 crore a year along with revenue loss due to leakages and tax evasion.