After four months, gross Goods and Services Tax (GST) collections fell below the Rs 1 lakh crore-mark, declining by 8.4 per cent over last year to Rs 97,597 crore for March (for sales in February). A drop of 7.8 per cent in returns filing over last month, 4 per cent fall over last year in domestic revenue, and a sharp 23 per cent contraction in revenue from imports led to the fall, with the Centre missing its RE for 2019-20 by Rs 22,204 crore at Rs 5.90 lakh crore.
Experts expect GST revenue to fall further when the impact of COVID-19 will be reflected more in April collections (for sales in March), amid the prevailing overall economic slowdown.
With this, the total gross GST revenue now stands at Rs 12.22 lakh crore for 2019-20. States’ GST (SGST), not taking into account the compensation from the Centre, are estimated to have fallen short of the aggregate protected level by around Rs 1.5 lakh crore in FY20. The government was able to raise compensation cess of only Rs 95,768 crore against the total protected revenue for states, which is calculated assuming 14 per cent growth on base year of 2015-16.
Compensation to states has already been delayed due to shortfall of cess collections.
Tax experts raised concerns about the low level of collections, ascribing it to liquidity issues being faced by small and medium businesses. PwC India partner & leader-indirect tax-Pratik Jain said, “While there could be some impact of slowdown that got triggered during to the onset of COVID 19 situation (though the impact of lockdown will be reflected in April 20 numbers), there is around 7 per cent reduction in filing of GSTR 3B over last month. It seems that many businesses may not have been able to pay GST because of liquidity issues being faced after the lock down. As the second half of March ‘20 has been significantly impacted due to COVID 19 outbreak, the collections in April are likely to be substantially lower … The impact on the fiscal deficit for FY 19-20 will now have to be seen.”
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