Covid-19 consequences: GST kitty dips, but shows recovery signs

Goods and Services Tax (GST) collections in July declined 3.8% to Rs 87,422 crore from the earlier month and dropped 14.3% year-on-year because the coronavirus illness (Covid-19) pandemic took its toll on the financial system, in response to figures launched by the finance ministry on Saturday.

In June, GST collections amounted to Rs 90,917 crore, In July 2019, income collections have beenRs 1,02,082 crore.

Conceding that July collections have been decrease than June’s, the finance ministry identified in an announcement “…it is important to note that during the previous month, a large number of taxpayers also paid taxes pertaining to February, March and April 2020 on account of the relief provided due to Covid-19.” That means July’s precise collections are virtually sure to have been greater than June’s — pointing to a revival in enterprise exercise which remains to be nicely beneath pre-pandemic ranges.

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Taxpayers with a turnover of lower than Rs 5 core nonetheless get pleasure from a respite in submitting of their returns till September 2020, the ministry added.

GST collections have been badly hit within the present monetary 12 months due to a 68-day nationwide lockdown enforced since March 25 to test the unfold of Covid-19. Collections in April plunged 72% to Rs 32,172 crore in comparison with the identical month final 12 months. The year-on-year decline in May was 38% to Rs 62,151 crore. The year-on-year fall in June this 12 months narrowed to 9%.

Experts mentioned the pattern in GST collections, a bellwether of financial well being, was positive. “June and July data reveal that broadly the collections are stabilising between 85-90% of the corresponding period last year. This is alsocorroborated by the number of E-Way bills being generated on a daily basis, which indicates that supply chain is getting back to normal.”

E-Way payments, or Electronic Way payments, are required for motion of products by GST-registered entities.

Gross GST income collected in July was Rs 87,422 crore, of which central GST (CGST) was Rs 16,147 crore, state GST (SGST) was Rs 21,418 crore and built-in GST (IGST) Rs 42,592 crore. The cess assortment within the month was Rs 7,265 crore, the finance ministry assertion mentioned.

“The government has settled Rs 23,320 crore to CGST and Rs 18,838 crore to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of July,2020 is Rs 39,467 crore for CGST and Rs 40,256 crore for the SGST,” it added.

Jain mentioned: “This augurs well for the government and collections are likely to improve further as lockdown is eased progressively. Industry can perhaps hope for some more GST relief, particularly in form of liquidity support as they navigate through the slowdown.”

MS Mani, accomplice at consulting agency Deloitte India, mentioned:“While the overall GST collections for the month are heartening , the collections in many of the major states coming close to last year’s collections indicates that the recovery process has slowly started with the unlockdown process underway in these states.”

“The progressive unlockdown steps taken by various states in June are reflected in the improvement in GST collections for July although the figures also include some transactions in respect of earlier months,” Mani added.