GST collections decline almost 10% to Rs 83,346 cr in October on tax rate cuts, teething troubles
As many as 50.1 lakh GST returns filed for October resulted in a revenue of Rs 83,346 crore, down from over Rs 92,000 crore in the previous month
New Delhi: The Goods and Services Tax (GST) collections slipped almost 10 percent to Rs 83,346 crore in October as tax rates on several product were cut and teething troubles with the new regime pushed back implementation of key provisions.
As many as 50.1 lakh GST returns filed for October resulted in a revenue of Rs 83,346 crore, down from over Rs 92,000 crore in the previous month, a finance ministry statement said.
It attributed the drop in collections to rates on several commodities being cut and tax administration being based on self-declaration as matching of returns, electronic transit permit system or e-way bill and reverse charging being postponed.
Also, there was additional tax inflow on inter-state movement of goods, called Integrated-GST or IGST, in the first three months while the actual credit being utilised only when final sale transaction taking place.
Pratik Jain, Leader-indirect Tax, PwC said: "While the overall collection for the October month is lower, this may not be cause of immediate concern as it might be due to refunds given to exporters and opening credit claimed by businesses, along with some reduction in the rate in October, said . The collection for November may also be on lower side due to substantial rate cuts from mid of the month. While to a large extent the shortfall is likely to be offset by increase in demand, the results may take another 2 to 3 months to become visible. The correct picture may emerge by end of December when we have 6 months data to look at. Collection may improve once the invoice matching starts, hopefully in next couple of months.”
The GST, which was implemented from 1 July, has subsumed over a dozen central and state levies including excise duty, service tax and VAT. The revenues collected are split between the Centre and states in a pre-decided formula.
The finance ministry said Rs 10,806 crore was released to states from the revenue collected from levy of cess on luxury and sin goods, in July and August. A compensation of Rs 13,695 crore for September and October is being released, it added.
The compensation is to make up for any loss of revenue to the states arising from implementation of the GST.
"The states' revenues have been fully protected taking base year revenue as 2015-16 and providing a projected revenue growth rate of 14 percent," the ministry said.
As per official data available, GST collections in the maiden month of July was over Rs 95,000 crore while in August, the figure was over Rs 91,000 crore. In September, it was over Rs 92,150 crore. October is the fourth month of GST rollout.
Explaining the downward trend in tax revenue under GST, the ministry said initially Integrated GST was paid on transfer of goods from one state to another.
"As and when the final transaction of these goods takes place, the credit for IGST is being utilised for payment of SGST and CGST and therefore, the inflow of new taxes is low," it said.
Also, since the overall incidence of taxes on most of the commodities has come down under the GST, it would naturally have some implication on the revenues of the government, the ministry said.
The total number of initial GSTR-3B returns filed for the return period July, August, September and October 2017 till is 58.7 lakh, 58.9 lakh, 57.3 lakh and 50.1 lakh, respectively.