GST Collections Recover After Record Low Of Rs 32,294 Crore For March
The government's GST collections improved for the second straight month after dropping to a record low in March as sales fell during the nationwide lockdown to contain the coronavirus pandemic.
The mop up for May, collected in June, stood at Rs 90,917 crore, according to a statement by the Ministry of Finance. That's a 46.6% jump from April and 9% drop from the year-ago period. The revenue for March had plunged 72% year on year to Rs 32,294 crore.
The government released GST collections data for March, April and May together as deadlines for paying tax for March onward were extended.
The drop in collections came as the world's biggest lockdown brought the economy to a standstill before the government gradually lifted curbs. India is now headed for its first full-year contraction in four decades.
Breakup of GST collections for May
- Central GST: Rs 18,980 crore
- State GST: Rs 23,970 crore
- Integrated GST: Rs 40,302 crore
- Compensation cess: Rs 7,665 crore
Integrated GST is settled between states and the central government based on consumption in respective states. After the settlement, central and state GST stood at Rs 32,305 crore and Rs 35,087 crore, respectively.
The ministry did not share the break-up of tax collected for March and April.
The GST collected in the first quarter of the financial year ending March 2021 was 59% of the revenue collected in the same period last year.
After declining substantially during the first quarter, the increase in collections shows that a recovery in economy and GST mop-up is expected soon, said Abhishek Jain, partner at EY India.
Agreed MS Mani, partner at Deloitte India. The decline in GST revenue was expected due to business activities coming to a near halt, but the collections indicate that a revival is underway and the mop-up will improve in the coming months.
Returns for February, March, and April have also been filed in June, besides that of May. That's because the deadline for filing returns was relaxed, the statement said, adding some returns for May will get filed in July. But this will only lead to a marginal increase in the government's revenue as large taxpayers, with annual turnover of more than Rs 5 crore, would have already made their tax payments.
The businesses with turnover of more than Rs 5 crore had to pay GST for April by June 24, and for May was June 27. Taxpayers having turnover of up to Rs 5 crore can pay tax for April by July 9, and for May by Sept. 15.
The jump in GST collection in June doesn't imply that it would just include tax payment for the period of May, said Rajat Bose, partner at Shardul Amarchand Mangaldas & Co. That would also include tax paid for March and April, justifying a spike in collections as tax payment deadline was extended, Bose told BloombergQuint.
According to Deloitte's Mani, as the return filing timelines for March-May were extended, the right way to analyse the collections would be to compare it on a quarterly basis than on a monthly basis.
Manufacturing States See Drop in Revenue
GST revenue for most manufacturing states declined 1-15% year-on-year in June as the lockdown stalled economic activity.
- Tamil Nadu saw its state GST drop 15% year on year to Rs 4,976 crore
- Gujarat's revenue declined 6% year-on-year to Rs 6,025 crore.
- Uttar Pradesh and Maharashtra's GST revenue was down 3% and 1% year-on-year to Rs 5,194 crore and Rs 14,987 crore, respectively in June.
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