Goods and services tax (GST) collections slumped to a three-month low in August, and came in 12 percent lower year-on-year (YoY), indicating slower recovery in economic activity. However, compensation cess collections rose for the first time in five months, and 6 percent YoY, amid the tussle between the Centre and states.
The overall mop-up remained well below the Rs 1-trillion mark for the sixth straight month owing to the pandemic, even as unlocking began in June. GST collections stood at Rs 86,449 crore in August, compared to Rs 87,422 crore in July, according to finance ministry data. It was at 88 percent of August 2019 collections.
A large portion of the fall could be attributed to imports, which were down 23 percent YoY, while domestic transactions were down just 8 percent YoY. “During the month, revenues from imports were at 77 percent and revenues from domestic transactions (including import of services) at 92 percent of revenues from these sources during the same month last year,” the ministry of finance said in an official release.
However, in July, revenues from domestic transactions had touched 96 percent of last year’s levels, with imports at 84 percent of the same. “It may be noted that taxpayers with turnover below Rs 5 crore continue to enjoy relaxation in filing of returns till September,” the ministry explained in the release.
In order to improve collections, the government is planning more anti-evasion measures, including e-invoicing for large firms with turnover of Rs 500 crore, from October 1.Compensation cess came in at Rs 7,215 crore in August 5.7 percent higher than the Rs 6,822 crore in August 2019. The GST Council is expected to meet in a week to discuss the two options on an alternative compensation mechanism proposed by the Centre.
Central GST collections fell to Rs 34,122 crore in August, against Rs 39,467 crore in July. State GST collections stood at Rs 35,714 crore, lower than Rs 40,256 crore during the previous month. Integrated GST mopup was also lower at Rs 42,264 crore, compared to Rs 42,592 crore in the previous month.
Among large states, a sharp decline in collections was seen in Maharashtra, Karnataka, and Tamil Nadu at 13 percent, 11 percent, and 12 percent, respectively. Delhi saw an 18 percent fall. However, a marginal rise was recorded in Rajasthan and UP, whereas a slight drop was reported by Haryana and Gujarat.
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