GST collection in October exceeds Rs 1L cr mark first time in eight months

The Goods and Services Tax (GST) assortment in October exceeded the Rs 1 lakh crore benchmark for the primary time in eight months at Rs 1,05,155 crore, over 10% annualised leap and a second consecutive progress, indicating robust indicators of financial restoration for the reason that Covid-19 pandemic gripped India and compelled a nationwide lockdown in March this 12 months.

“During the month, revenues from import of goods was 9% higher and the revenues from domestic transaction are 11% higher than the revenues from these sources during the same month last year,” a finance ministry assertion mentioned on Sunday.

HT reported on October 24 that the GST collections, a barometer of financial well being, would surpass Rs 1 lakh crore. The tax assortment noticed positive progress for the primary time in September with a modest 4% year-on-year enhance at Rs 95,480 crore after remaining subdued for seven months.

Improved assortment will proportionately cut back the quantity required for compensating states, a finance ministry official, mentioned requesting anonymity. The Union authorities is borrowing Rs.1.1 lakh crore on behalf of states to compensate them for part of the estimated Rs. 2.35 lakh shortfall this fiscal 12 months of their share of income from GST due to a steep fall in assortment.

With the “Unlock” course of gathering tempo, financial actions have begun to revive, mentioned MS Mani, a associate at consulting agency Deloitte India. “Collections which are higher by nearly Rs 10,000 crores compared to the same period in 2019 indicate the definitive revival of consumption and festival spends across the economy. Continuance of this trend will help in narrowing the fiscal deficit for FY 21 (financial year 2021) and will go a long way in reviving business confidence across sectors as the impact of the unlockdown process across states gets translated into GST collection figures,” he mentioned.

The coronavirus illness outbreak pressured a 68-day exhausting lockdown beginning March 25, which noticed short-term closure of producers and repair suppliers in all sectors however these deemed important, confined residents indoors and shut public transport. Lockdown restrictions have progressively been eased.

As a results of the lockdown, the GST revenues declined by a year-on-year 8.4% to Rs 97,597 crore in March, and by 72% to Rs 32,172 crore in April. In May, income from the oblique tax dropped 38% on an annual foundation to Rs 62,151 crore. The tempo of the decline slowed to 9% in June, when Rs 90,917 crore income got here in, because of receipts from the lockdown backlog. Revenue once more contracted sharply year-on-year by 14.3% in July to Rs 87,422 crore and 13% in August to Rs 86,449 crore. The collections noticed first positive progress after seven months in September 2020 with a modest 4% year-on-year enhance at Rs 95,480 crore.

Mani mentioned the comparability of the GST collections in case of main states with the same interval final 12 months reveals very clear indicators of enhance in consumption and festive shopping for. “If the trend of the past two months continues, then it would indicate that a sustained economic revival is underway” he added.

According to the official information issued on Sunday, GST income assortment in Maharashtra grew by 5% at Rs 15,799 crore over the identical interval final 12 months. The progress development was stronger in Gujarat at 15% (Rs 6,787 crore) and 19% in Haryana at Rs 5,433 crore. Revenue assortment of Delhi, nonetheless, noticed an 8% fall at Rs 3,211 crore.

According to the official assertion, the entire variety of returns filed for the month of October was Eight million.

Pratik Jain, associate and chief of the oblique tax observe at PwC India, mentioned, “Given the surge in number of returns filed and the fact that there is clear uptake in demand due to revival of economy as well as upcoming festive season, it’s not surprising that collections in October has exceeded 1 lac crore.”

“One of the reason for higher number of returns could be the fact that last date for claiming input credit for 2019-20 was September 30th and lot of companies would have carried out a yearly reconciliation and asked their vendors to file returns or report missing transactions. Given the festivities, collections in November could also be robust. We would need to see if this trend continues after November as well,” he added.

Abhishek Jain, tax associate at consultancy agency EY mentioned that some potential causes for this surge could possibly be the “splurged demand” on account of the festivities and different reconciliations.