New Delhi / GST revenue in Nov crosses ₹1 lakh cr, 3rd highest since GST introduced

Helped by government stimulus measures, the Goods and Services Tax (GST) collection in November has hit Rs 1,03,492 crore after dropping below that level for three consecutive months amid a deceleration of overall economic growth.

The November 2019 collection is the third highest monthly collection since introduction of GST, next only to April 2019 and March 2019 collections, the finance ministry said.

Gross GST revenue collected in October was Rs 95,380 crore, a 5.3% decline year-on-year. Compared to the previous month, October revenue marked a 3.8% improvement. September collection was Rs 91,916 crore, the lowest since February 2018. The tax collection in August was Rs 98,202 crore.

GST collections dipped below Rs.1 lakh crore in August, September and October in the face of a growth deceleration as consumers held back on spending and private investment was tepid. The economy grew 4.5% percent in the three months ended September, the sixth consecutive quarterly decline, according to figures released on Friday.

The government has announced several rounds of fiscal, administrative and policy measures to stimulate the economy since August 23 and the biggest one was on September 20, when corporate tax rates were slashed in a step that will entail the loss of Rs.1.45 lakh crore in revenue to the exchequer

Pratik Jain, partner and leader of the indirect tax practice at PwC India, struck a note of caution.

“It would be difficult to read too much into the increase in collection for one month. We need to see what’s the trend,” Jain said. “Government has taken steps in the right direction by simplifying the compliances, going after the tax evaders by more efficient use of technology/data analytics and not falling for temptation of increasing the tax rates. These efforts, coupled with introduction of E-invoicing from next year should lead to gradual increase in GST collections as well, though it would also depend on the overall economy.”

The 4.5% economic expansion in July-September was the slowest pace of growth since March 2013, and reflected inadequate revival in consumption and stagnant investment. Gross domestic product (GDP) growth in the first half of the current fiscal year was 4.8%, the lowest since the new GDP series was launched in 2012-13.

The government started the current financial year with robust GST revenue collection of almost Rs 1.14 lakh crore in April, the highest ever since the new indirect tax regime was launched in July 2017. The collection crossed the Rs 1 lakh crore mark even in May before dipping slightly below that level to Rs 99,940 crore in June. It was just above Rs.1 lakh crore in July.

“With the implementation of 20% cap on provisional {input tax} credit, there may be some spike in GST collections,” said Archit Gupta, founder and CEO of Cleartax, a financial technology platform providing tax and investment-related solutions. “However, the slowdown in the economy and drop in consumer spending will keep the pressure going. E-invoicing is being launched which can help plug large leakages. More efforts may be required to see a significant increase in collections.”