The Centre and state governments collected a little more than ₹1 lakh crore in Goods and Services Tax (GST) receipts in May, an improvement of 6.7% from the same month a year ago, but below the growth rate needed by the Centre to avoid compensating states for revenue losses.
Goods and Services Tax GST in India
The Centre and states need to collect about ₹1.14 lakh crore every month this fiscal, going by a 14% notional GST revenue growth for states that the central government is committed to protect.
The sluggish momentum in tax collection growth is partly due to tax rate cuts in the past as the GST Council had sought to moderate rates wherever it found a compelling case in the new system of taxation. The shortfall from the target could increase the central government’s liability to compensate notional revenue loss of states in the GST regime, a constitutional commitment agreed prior to the tax reform.
The sluggish pace of revenue growth also also leaves very little legroom for the GST Council to cut tax rates in the near future unless revenue collection sees a surge. It also implies the authorities will now focus on improving compliance by taxpayers using data collected from various sources. Central and state authorities had set a two-year transition period for the GST to stabilise till 30 June this year.
The total gross GST revenue collected in the month of May relating to transactions in April is ₹1,00,289 crore, according to a statement issued by the finance ministry. After adjustments, the Union government and states collected ₹35,909 crore and ₹38,900 crore. respectively.
According to Vishal Raheja, DGM, Taxmann, a firm that assists taxpayers, though the GST collections in May 2019 exceeded ₹1 lakh crore, it was lower than ₹1.14 lakh crore collected in April 2019 despite an increase in return filings in May. This could be the result of additional taxes paid by taxpayers in April for the differences found in the reconciliation done for FY19.
Year end revenue collections tend to be higher than that of other months. Experts also described revenue receipt remaining above ₹1 trillion in March, April and May as a positive sign. “While last two months had witnessed higher growth on account of year end collections, the increase vis-a-vis May 2018 signifies good growth,” said Abhishek Jain, Tax Partner, EY. (ends)
Gross collection at ₹1,00,289 crore in May is, however, lower than ₹1,13,865 crore in April.
A total of 72.45 lakh GSTR-3B returns were filed in May, higher than 72.13 lakh in April.
“The total gross GST revenue collected in the month of May, 2019 is ₹1,00,289 crore of which CGST is ₹17,811 crore, SGST is ₹24,462 crore, IGST is ₹49,891 crore and Cess is ₹8,125 crore,” the finance ministry said in a statement.
An amount of ₹18,934 crore has been released to states as GST compensation for the months of February-March, 2019.
